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Determining the Exchange Rate: Purchasing Power Parity - PPP

Author

Listed:
  • Bangun WIDOYOKO

    (Universitas Negeri Malang, Indonesia)

  • Ely SISWANTO

    (Universitas Negeri Malang, Indonesia)

  • F. Danardana MURWANI

    (Universitas Negeri Malang, Indonesia)

Abstract

This study aimed to examine the effect of inflation on the issue of exchange rate determination of the forward exchange rate on the exchange rate of RMB (Renminbi) to Rupiah. Inflation has been chosen as an independent variable because of its close relation to PPP (purchasing power parity) theory. Analyses in this research have used logistic analysis with time series data. The data that has been used include exchange rate data with the period 2007-2017 with a sample size of 132 data. The results of this study have shown that inflation is effective in determining the exchange rate.

Suggested Citation

  • Bangun WIDOYOKO & Ely SISWANTO & F. Danardana MURWANI, 2018. "Determining the Exchange Rate: Purchasing Power Parity - PPP," Expert Journal of Finance, Sprint Investify, vol. 6(1), pages 12-15.
  • Handle: RePEc:exp:finnce:v:6:y:2018:i:1:p:12-15
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    References listed on IDEAS

    as
    1. Kenneth Rogoff, 1996. "The Purchasing Power Parity Puzzle," Journal of Economic Literature, American Economic Association, vol. 34(2), pages 647-668, June.
    2. Alan M. Taylor, 2002. "A Century Of Purchasing-Power Parity," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 139-150, February.
    3. Kay Strong & Subhash Sharma, 2002. "Cointegration of price measures: Evidence from the G-7," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 26(1), pages 111-122, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F37 - International Economics - - International Finance - - - International Finance Forecasting and Simulation: Models and Applications
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation

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