The Carry Trade and Purchasing Power Parity, business & finance homework help

User Generated

emzx

Business Finance

Description

1. With regards to current economic conditions, what is the effect of a large carry trade on U.S. monetary policy?

2. How is the purchasing power parity of the Euro (€) relative to the Pound Sterling (£) and US Dollar ($) affected by a Greek exit from European monetary union? What is the impact on European and American debt, equity, and mortgage markets?

- min 3 references for each question, must be in apa and business/academic

-min of one page for each question.

Thank you - let me know if there is any questions

User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

Thank you for working with me

Running head: THE CARRY TRADE AND PURCHASING POWER PARITY

The Carry trade and Purchasing Power Parity
Name:
Institutional Affiliation:

1

THE CARRY TRADE AND PURCHASING POWER PARITY

2

The Carry Trade and Purchasing Power Parity

Effects of a large carry trade on U.S monetary policy based on current economic position
The inflows of capital are the main lead to central bank increasing returns in carry trades,
raise interest's rate and generate further capital inflows. The impacts of a large carry trade to the
economy of a country are based on the monetary policies that every country decides to employ in
this kind of investment (Burnside, Eichenbaum, Kleshchelski & Rebelo,2010). The effects of
carry trade are minimized by the central bank which implements a flexible capital inflation
aiming policy under the discretion of announcing the long run capital inflows. One of the major
effects of large carry trades to the United States monetary policy is on the exchange rate. Carry
trades usually originate from the act of borrowing an amount of low- yield currency and
investing that particular currency to a high yielding currency. When a host country increases the
interes...


Anonymous
Great! 10/10 would recommend using Studypool to help you study.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Similar Content

Related Tags