A Classroom Experiment on Exchange Rate Determination with Purchasing Power Parity
AbstractThe authors developed a classroom experiment on exchange rate determination appropriate for undergraduate courses in macroeconomics and international economics. In the experiment, students represent citizens from different countries and need to obtain currency to purchase goods. By participating in an auction to buy currency, students gain a better understanding of currency markets and exchange rates. The implicit framework for exchange rate determination is one in which prices are perfectly flexible (in the long run) so that purchasing power parity (PPP) prevails. Additional treatments allow students to examine the effects of price changes, tariffs, and nontradable goods on the exchange rate and to explore the possible resulting deviations from PPP. The experiment is suitable for classes of 8 to 50 students and can be run in as short a period as 30 minutes.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Taylor and Francis Journals in its journal The Journal of Economic Education.
Volume (Year): 40 (2009)
Issue (Month): 2 (April)
Contact details of provider:
Other versions of this item:
- Mitchell, David & Rebelein, Robert P. & Schneider, Patricia & Simpson, Nicole B. & Eric Fisher, . "A Classroom Experiment on Exchange Rate Determination with Purchasing Power Parity," Vassar College Department of Economics Working Paper Series 87, Vassar College Department of Economics.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Taylor, Alan M & Taylor, Mark P, 2004.
"The Purchasing Power Parity Debate,"
CEPR Discussion Papers
4495, C.E.P.R. Discussion Papers.
- Alan Taylor & Mark Taylor, 2004. "The Purchasing Power Parity Debate," Working Papers 46, University of California, Davis, Department of Economics.
- Taylor, Alan & Taylor, Mark, 2004. "The Purchasing Power Parity Debate," Working Papers 04-6, University of California at Davis, Department of Economics.
- Alan M. Taylor & Mark P. Taylor, 2004. "The Purchasing Power Parity Debate," NBER Working Papers 10607, National Bureau of Economic Research, Inc.
- Lisa R. Anderson & Sarah L. Stafford, 2005.
"Does Crime Pay? A Classroom Demonstration of Monitoring and Enforcement,"
17, Department of Economics, College of William and Mary.
- Lisa R. Anderson & Sarah L. Stafford, 2006. "Does Crime Pay? A Classroom Demonstration of Monitoring and Enforcement," Southern Economic Journal, Southern Economic Association, vol. 72(4), pages 1016â1025, April.
- Brauer, Jurgen & Delemeester, Greg, 2001. " Games Economists Play: A Survey of Non-computerized Classroom-Games for College Economics," Journal of Economic Surveys, Wiley Blackwell, vol. 15(2), pages 221-36, April.
- Denise Hazlett, 2003. "A Search-Theoretic Classroom Experiment with Money," International Review of Economic Education, Economics Network, University of Bristol, vol. 2(1), pages 80-90.
- Charles A. Holt, 1999. "Teaching Economics with Classroom Experiments: A Symposium," Southern Economic Journal, Southern Economic Association, vol. 65(3), pages 603-610, January.
- Jannett Highfill & Raymond Wojcikewych, 2011. "The U.S.-China Exchange Rate Debate: Using Currency Offer Curves," International Advances in Economic Research, Springer, vol. 17(4), pages 386-396, November.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).
If references are entirely missing, you can add them using this form.