The Research of Uncovered Interest Parity and Monetary Policy

DOI

10.2991/icsshe-17.2017.23How to use a DOI?

Keywords

uncovered interest parity, monetary policy, limitations, open economy

Abstract

This article introduces the theory of uncovered interest parity and describes the relationship between monetary policy and the UIP theory. The UIP means that the expected rate of depreciation of domestic currency against one foreign currency is equal to the interest rate differential in the two countries. This article will demonstrate the theory of UIP with some past econometric tests and discuss whether this theory can hold in different time horizons. Then, how the UIP influences the monetary Policy will be showed in the subsequent part. The UIP is more important in the economic analysis perspective than in the exchange rate market. The simple UIP condition could not be an efficient predictor in the open economy, but its usefulness in international finance researches is obvious.

Copyright

© 2017, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Li Li
AU  - Gang-Ping Lin
PY  - 2017/09
DA  - 2017/09
TI  - The Research of Uncovered Interest Parity and Monetary Policy
BT  - Proceedings of the 2017 3rd International Conference on Social Science and Higher Education
PB  - Atlantis Press
SP  - 90
EP  - 92
SN  - 2352-5398
UR  - https://doi.org/10.2991/icsshe-17.2017.23
DO  - 10.2991/icsshe-17.2017.23
ID  - Li2017/09
ER  -