Chapter organization Introduction The law of one price Purchasing power parity A Long-Run Exchange Rate Model Based on PPP Empirical Evidence on PPP and the Law of One Price Explaining the Problems with PPP Copyright C 2003 Pearson Education, Inc Slide 15-2Copyright © 2003 Pearson Education, Inc. Slide 15-2 ▪ Introduction ▪ The Law of One Price ▪ Purchasing Power Parity ▪ A Long-Run Exchange Rate Model Based on PPP ▪ Empirical Evidence on PPP and the Law of One Price ▪ Explaining the Problems with PPP Chapter Organization