The Purchasing Power Parity Theory Works – Illustrated by the Sad Tale of the Argentine Peso

© 2021, Farok J. Contractor, Distinguished Professor, Management & Global Business, Rutgers Business School On  November 8, 2021, it happened — as predicted by the purchasing power parity (PPP) theory: the Argentine monetary unit crossed the symbolically important threshold of 100 pesos = 1 US dollar (USD). A lurid but sad tale. A century ago, … Continue reading The Purchasing Power Parity Theory Works – Illustrated by the Sad Tale of the Argentine Peso

Four Salient Facts about the Chinese Yuan

© 2017 Farok J. Contractor, Rutgers Business School On February 23, 2017, just hours after his new Treasury secretary pledged a more methodical approach to analyzing Beijing's foreign exchange practices, President Donald Trump declared: "Well...I think they're grand champions at manipulation of currency. So I haven't held back.... We'll see what happens."  — Reuters Four Salient Facts: … Continue reading Four Salient Facts about the Chinese Yuan

The G20 Summit in China: An Annual “Talking Shop”? Or a Potential Bedrock of Global Civilization?

© 2016 Prof. Farok J. Contractor, Rutgers Business School Note: A version of this article was also published on The Conversation as How the G20 can ensure the marvelous gains from globalization aren't lost. What do summits such as the G20 accomplish? Posing for pictures after their summit, the leaders of the G20, a mixed bag of … Continue reading The G20 Summit in China: An Annual “Talking Shop”? Or a Potential Bedrock of Global Civilization?

The Simple Math: How a Mere Quarter-Percent Interest Rate Hike Can Produce Big Swings on Bond Prices and Foreign Exchange Rates

© 2015 Prof. Farok J. Contractor, Rutgers University Bah! Humbug! What can a mere quarter-percent hike in the Federal Reserve Bank’s interest rate do to markets? It seems so small a change as to be trivial. For two years prior to Janet Yellen’s appointment as Chair in January 2014, her predecessor, Ben Bernanke, and the business … Continue reading The Simple Math: How a Mere Quarter-Percent Interest Rate Hike Can Produce Big Swings on Bond Prices and Foreign Exchange Rates