covered interest parity
AbstractCovered Interest Parity describes an idealised situation in foreign exchange markets in which the interest rates on assets differing only in the currency of denomination will be equal. This article describes the theoretical assumptions under which CIP holds and the evidence for CIP in practice.
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This chapter was published in: Steven N. Durlauf & Lawrence E. Blume (ed.) , , pages , 2010, 2nd quarter update.
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