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THE ECONOMICS OF THE UNCOVERED INTEREST PARITY CONDITION FOR EMERGING MARKETS
Author(s) -
Alper C. Emre,
Ardic Oya Pinar,
Fendoglu Salih
Publication year - 2009
Publication title -
journal of economic surveys
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.657
H-Index - 92
eISSN - 1467-6419
pISSN - 0950-0804
DOI - 10.1111/j.1467-6419.2008.00558.x
Subject(s) - interest rate parity , economics , emerging markets , context (archaeology) , parity (physics) , foreign exchange , empirical evidence , financial economics , purchasing power parity , macroeconomics , interest rate , exchange rate , monetary economics , international economics , paleontology , philosophy , physics , epistemology , particle physics , biology
Financial account liberalizations since the second half of the 1980s paved the way for the burgeoning literature that investigates foreign exchange market efficiency in emerging markets (EMs) via testing for the uncovered interest parity (UIP) condition. This paper is the first to provide a broad and critical survey on this recent literature. Specifically, we attempt to answer the following questions. First, are the EMs different from the developed economies in the context of the UIP condition? Second, to what extent can these differences contribute to the debate on the UIP literature? Third, what are the empirical challenges specific to the EMs in testing for the UIP condition?