Kenneth R. Szulczyk
Figure 1. The U.S. dollar-per euro exchange rate
Figure 2. First difference of the U.S. dollar per euro exchange rate
Purchasing Power Parity (PPP) Theory
Purchasing Power Parity (PPP) Theory is based on the Law of One Price. Goods and
products denominated in the same currency should have the identical price between markets
0.6
0.8
1.0
1.2
1.4
1.6
1.8
Jan-99Sep-99May-...Jan-01Sep-01May-...Jan-03Sep-03May-...Jan-05Sep-05May-...Jan-07Sep-07May-...Jan-09Sep-09May-...Jan-11Sep-11May-...
U.S. dollar per euro
-0.12
-0.07
-0.02
0.03
0.08
Feb-99Oct-99Jun-00Feb-01Oct-01Jun-02Feb-03Oct-03Jun-04Feb-05Oct-05Jun-06Feb-07Oct-07Jun-08Feb-09Oct-09Jun-10Feb-11Oct-11Jun-12