Recent theories of exchange rate determination have emphasized limited UIP arbitrage by international financial institutions. New regulations since 2008 have also lead to imperfect CIP arbitrage. We s
Is deficit finance free when real borrowing rates are routinely lower than growth rates? We study this question in a production-based asset-pricing model that features heterogeneous trading technologi
The presence of purchasing power parity is often attributed to the exploitation of arbitrage opportunities in goods markets. We examine this presumption for a 1960-1996 monthly panel of bilateral exch
