Question

What are ppp theory and international fisher effects?

Answer 1

Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.

The international Fisher effect is a hypothesis in international finance that suggests differences in nominal interest rates reflect expected changes in the spot exchange rate between countries.

Hope you got the answer. God bless u.

Answer 2

Explanation:

• Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries. ... The basis for PPP is the "law of one price".

• The International Fisher Effect (IFE) is an economic theory stating that the expected disparity between the exchange rate of two currencies is approximately equal to the difference between their countries' nominal interest rates.