1. First edition Global Economic Issues and Policies PowerPoint Presentation by Charlie Cook Copyright © 2004 South-Western/Thomson Learning. All rights reserved. Chapter 8 The Power of Arbitrage— Purchasing Power and Interest Rate Parities

2. Copyright © 2004 South-Western/Thomson Learning. All rights reserved.8–2 Table 8-1 The Hamburger Standard Source: Data from http://www.economist.com, April 2002.

3. Copyright © 2004 South-Western/Thomson Learning. All rights reserved.8–3 Figure 8-1a Covered Interest Arbitrage and Interest-and Exchange-Rate Adjustments

4. Copyright © 2004 South-Western/Thomson Learning. All rights reserved.8–4 Figure 8-1b Covered Interest Arbitrage and Interest-and Exchange-Rate Adjustments (cont’d)

5. Copyright © 2004 South-Western/Thomson Learning. All rights reserved.8–5 Figure 8-2 Approximate Deviations from Uncovered Interest Parity Source: International Financial Statistics, International Monetary Fund.

6. Copyright © 2004 South-Western/Thomson Learning. All rights reserved.8–6 Figure 8-3 Forward and Spot Exchange-Rate Differentials Source: International Financial Statistics, International Monetary Fund.

7. Copyright © 2004 South-Western/Thomson Learning. All rights reserved.8–7 Figure 8-4 Real Interest Rate Differences Source: International Financial Statistics, International Monetary Fund.