Two explanations are given for why nominal or real returns differ across currencies: foreign exchange risk premia and systematic (rational) forecast errors. This study reexamines three parity conditions in international finance, uncovered interest parity, purchasing power parity, and real...

Two explanations are given for why nominal or real returns differ across currencies: foreign exchange risk premia and systematic (rational) forecast errors. This study reexamines three parity conditions in international finance, uncovered interest parity, purchasing power parity, and real...

Many past studies of relative financing costs in the United States and Japan have relied on interest rates from the 1970s and earlier when Japanese financial markets were subject to numerous regulations and controls and were shielded by capital controls from financial markets abroad. Interest...