Find a relevant news on exchange rate movement in the past and put together your analysis based on a) the models we learn in the class and 2) background research based on dataset from
Essentially, use knowledge you learned in the class and information from news source to show the following;
a. an evidence of actual exchange rate overshooting based on the prediction of the exchange rate model on asset approach,
b. an evidence of actual exchange rate movement according to the prediction of the model of long-term exchange rate determination based on PPP,
c. Examples of when actual exchange rate fails to adjust according to the prediction of the exchange rate models in a and b. Explain the condition when the model fails to predict the movement correctly. (Hint: look at which assumptions underlying the models have failed)