II. Real Interest Rate Parity HypothesisFor the derivation of the RIPH, three parity conditions are needed, including the Fisher equation, theUncovered Interest Parity (UIP) and the relativePurchasing Power Parity (PPP). We briefly elaborateon these conditions.According to the Fisher equation, the nominalinterest rate at time t in the home country, denoted byit, is decomposed into two parts as follows:it ¼ rt þ et ð1 Þ
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