This note deals with four central parity conditions that underlie most theories on the relationship between exchange rates, inflation and interest rates. Concepts are illustrated by a single example, studying the correlation between the U.S. dollar and the Norwegian krone. The note presents an intuitive understanding of the relationship and the exact mathematical formulas are often used in the analysis. "Hide
Mark Lipson on 17 pages. Publication Date: August 19, 2009. Prod. #: UV2538-PDF-ENG