I'm having troubles to understand the difference between the Real Exchange Rate and the PPP rate.
I know the first one is calculated using a basket of goods and services so that the non-tradeable basket costs the same in 2 countries (imagining a 2-country world). Now, isn't that the rate that would hold if PPP applies?
I think I'm wrong if I say that the real exchange rate is the one that makes PPP become valid. Any help appreciated.