Re: JNU 2013 SSS DISCUSSION

Posted by Ridhika on Apr 15, 2014; 5:57am
URL: http://discussion-forum.276.s1.nabble.com/JNU-2013-SSS-DISCUSSION-tp7584716p7586940.html

I get what you are saying .. but doesn't that create tremendous arbitrage possibilities? Effectively I can buy an apple for 1 euro on Germany and sell it for 3 in Italy ! -- even if this is possible initially won't flows of goods and capital neutralize the difference in real exchange rate in the long run ?

----- Reply message -----
From: "ViV [via Discussion forum]" <ml-node+[hidden email]>
To: "Ridhika" <[hidden email]>
Subject: JNU 2013 SSS DISCUSSION
Date: Tue, Apr 15, 2014 9:37 AM

Q.38...it's possible to have different real exchange rate...as nominal exchange rate will remain same but due to different prices in different countries its possible for countries to have different real exchange rate inspite of sharing same currency....

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