Can someone explain the difference between PPP, Non cover interest rate parity, Covered interest rate parity and...

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Can someone explain the difference between Purchasing Power Parity, Non covered interest rate parity, Covered interest rate parity and the Fisher Equation? Thanks.
 
PPP = exchange rates and inflation rates
(un)covered interest rate parity = exchange rates and interest rates
International Fisher = inflation rates and interest rates
So for example Uncovered interest rate parity is how much exchange rate will have to appreciate/depreciate given a interest rate differential of 2 countries. Same goes for the other relationships.
 
What’s the difference between covered and uncovered Interest rate parity?
 
Uncovered IRP uses the EXPECTED SPOT rate, i.e. you can’t buy it. With covered IRP you can trade on it (think hedged rate) and it uses the FORWARD rate
 
I too am having trouble with these. This is what I try to think of with each:
Relative PPP:
Exchange rates & Inflation
E(S1)/S = (1 + I FC)/ (1 + I DC)
Non Covered I-Rate Parity:
Exchange rates & Interest rates (Not covered => use E(S1), not Forward)
E(S1)/S = (1 + r FC)/(1 + r DC)
Covered I-Rate Parity:
Exchange rates & Interest rates (Covered => use Forward, not E(S1))
F/S = (1 + r FC)/(1 + r DC)
International Fisher Relation:
Interest Rates & Inflation
Domestic Relation:
(1+ nom rate) = (1 + real rate)(1 + E(infl))
International Relation:
(1 + r FC)/(1 + r DC) = (1 + I FC)/(1 + I DC)
Don’t forget Assets Market Approach:
It uses RPPP to find E(S1) and then uses Uncovered I-Rate Parity to find the spot today. It is a good tool when dealt with unexpected changes in monetary policy questions.
good luck out there.
 
Yup exactly.
Covered IRP uses forward price
Uncovered IRP uses Expected future spot price.
 
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