International Financial Management 2: IMF Challenges and Derivatives

This report provides a comprehensive analysis of Barry Eichengreen and Ngaire Woods' article, "The IMF's Unmet Challenges," exploring different economists' perspectives on the legitimacy of the IMF and its role in global governance. It delves into various conceptions of legitimacy, authority, and coercion in the context of the IMF's operations. The report further examines the theories of Purchasing Power Parity (PPP) and International Fisher Effect (IFE), explaining how these theories, in principle, make derivatives unnecessary for currency valuation, analyzing the implications of these theories in relation to exchange rates, inflation, and interest rates, and discussing their practical applications in international finance. The report also includes a discussion of the significance of PPP and IFE derivatives in currency evaluation and provides a detailed overview of the role of these theories in determining economic growth and living standards. The report uses the provided theories to analyze the relationship between the interest rate and the exchange rate in different countries, and offers insights into how these theories are applied in practice.