Impact economy and Interest rate parity: Difference between pages

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''Sustainability - impact - economic context - impact reporting''.
(IRP).


The impact economy model seeks to balance social and environmental concerns with profit.
This theory describes the expected relationship between [[Spot rate|spot]] and [[Forward forward rate|forward foreign exchange rates]], and the [[Interest rate|interest rates]] in the related currency pair.


Under efficient market conditions the interest rate parity theory predicts that the forward FX rate (available in the market today) should be equal to the spot FX rate, adjusted for the difference in interest rates between the currency pair over the relevant period.


:<span style="color:#4B0082">'''''Companies care about sustainable development'''''</span>


:"The impact economy takes the middle ground.
IRP holds very strongly for actively traded currency pairs; less so for currencies which are not so actively traded.  
 
:While the government produces the classical public goods, the government and companies care jointly about the common good of sustainable development.
 
:They do so by balancing profit and impact."
 
:''Schoenmaker, D. (2020) ‘The impact economy: balancing profit and impact’, Working Paper 2020/04, Bruegel, p13''




== See also ==
== See also ==
* [[Impact]]
* [[CertFMM]]
* [[Impact Economy Foundation]] (IEF)
* [[Covered interest arbitrage]]
* [[Impact investing]]
* [[Efficient market hypothesis]]
* [[Impact Investing Institute]] (III)
* [[Foreign exchange]]
* [[Impact Management Project]] (IMP)
* [[Forward forward rate]]
* [[Impact reporting]]
* [[Four way equivalence model]]
* [[Impact Taskforce]]
* [[Interest rate]]
* [[Impact-weighted accounts]]
* [[No arbitrage conditions]]
* [[International Sustainability Standards Board]] (ISSB)
* [[Spot rate]]
* [[Just transition]]
* [[Multilateral development bank]]  (MDB)
* [[Natural capital]]
* [[Principles for Responsible Investment]]  (PRI)
* [[Responsible investment]]
* [[Return on Sustainability Investment]]  (ROSI)
* [[Sustainable investment]]
* [[Sustainability]]
* [[Sustainability Accounting Standards]]
* [[Sustainability Accounting Standards Board]]
* [[Value Reporting Foundation]] (VRF)


[[Category:The_business_context]]
[[Category:Corporate_finance]]
[[Category:Investment]]
[[Category:Long_term_funding]]
[[Category:Ethics]]
[[Category:Identify_and_assess_risks]]
[[Category:Manage_risks]]
[[Category:Manage_risks]]
[[Category:Risk_frameworks]]
[[Category:Risk_reporting]]

Revision as of 20:18, 28 April 2016

(IRP).

This theory describes the expected relationship between spot and forward foreign exchange rates, and the interest rates in the related currency pair.

Under efficient market conditions the interest rate parity theory predicts that the forward FX rate (available in the market today) should be equal to the spot FX rate, adjusted for the difference in interest rates between the currency pair over the relevant period.


IRP holds very strongly for actively traded currency pairs; less so for currencies which are not so actively traded.


See also

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