This report mainly examines whether the Purchasing Power Parity （PPP） theory is supported by the data. The data used in the report contains the exchange rate of US dollar against New Zealand dollar, Consumer Price I...This report mainly examines whether the Purchasing Power Parity （PPP） theory is supported by the data. The data used in the report contains the exchange rate of US dollar against New Zealand dollar, Consumer Price Index （CPI） of the US, and Consumer Price Index of New Zealand. The time period of the data is from September 30th, 1914 to March 31st, 2010, the data were collected quarterly. Mathematical regressions and graphs are contained in the research. In this research, the simplified form of the PPP theory is analyzed, and then there is a comparison between the spotted exchange rates and the expected exchange rates. Finally, the observation on long-run PPP is explained. The key conclusion of this research is that, the PPP theory is not supported by the data, however, the long-run PPP does hold.展开更多
文摘This report mainly examines whether the Purchasing Power Parity （PPP） theory is supported by the data. The data used in the report contains the exchange rate of US dollar against New Zealand dollar, Consumer Price Index （CPI） of the US, and Consumer Price Index of New Zealand. The time period of the data is from September 30th, 1914 to March 31st, 2010, the data were collected quarterly. Mathematical regressions and graphs are contained in the research. In this research, the simplified form of the PPP theory is analyzed, and then there is a comparison between the spotted exchange rates and the expected exchange rates. Finally, the observation on long-run PPP is explained. The key conclusion of this research is that, the PPP theory is not supported by the data, however, the long-run PPP does hold.
