q write an expression for interest rate parity
Q. Write an expression for interest rate parity under the condition of imperfect asset substitutability.
Answer: R = R* + (Ee - E)/E + a where R denotes the risk premium that reflects the difference between the risk of domestic and foreign bonds.
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q assume an economy is in a liquidity trapa write an equation expressing interest rate parity under a fixed exchange rate regimeanswer liquidity trap
q write an expression for interest rate parity under the condition of imperfect asset substitutabilityanswer r r ee - ee a where r denotes the
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