I've found a formula derivation in my international economics book, but I can't understand how it was derived.
$ E P X = P^* IMP $
where E is the exchange rate, P is the level of national prices, X represents export, P* is the level of foreign prices, IMP represents import.
Then it derives it as:
$ e + p + x = p^* + imp $
saying that now it's expressed in terms of average annual variations. In a note, it says that this means that we're rewriting the first formula in terms of natural logs and differentiating it with respect to time. Please, could you give me a hint (or an explaination, if it's not too long) about the meaning of this derivation?
Thank you in advance and sorry for my awkward English