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bachelor in business administration
Polytechnic State University Sanluis
Jan-2006 - Nov-2010
CPA
Polytechnic State University
Jan-2012 - Nov-2016
Professor
Harvard Square Academy (HS2)
Mar-2012 - Present
The relationship between nominal exchange rate and relative prices. From the annual observations from 1980 to 1994, the following regression results were obtained, where Y = exchange rate of the German mark to the U.S. dollar (GM/$) and X = ratio of the U.S. consumer price index to the German consumer price index; that is, X represents the relative prices in the two countries:
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a. Interpret this regression. How would you interpret r2?
b. Does the negative value of Xt make economic sense? What is the underlying economic theory?
c. Suppose we were to redefine X as the ratio of German CPI to the U.S. CPI. Would that change the sign of X? And why?
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