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I do not really know much about economics, but I need to do a price comparision of a certain product between countries in Europe. The product is a pack of specific brand of cigarettes. We know that for instance in Spain the price of this pack of cigarettes costs 5 euros and just 2.6 euros in Bulgaria. However, given the difference in average wage in these countries, it might actually be that these cigarettes are worth more in Bulgaria than in Spain as they took more of a person's income. How would you express such difference? Is this what PPP is doing? As in, is PPP expressing the price of how much something is worth in terms of american dollars? Or is it something else?

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  • $\begingroup$ Yes you can use PPP for such comparisons. You could also try to do additional adjustments for what share of households budget is devoted to said item but data on that are unlikely available on consistent basis so you would have to do additional research. Also question of how to do international price comparisons was already asked on this site, for example here.Does that thread answer your question? If not can you please specify why not? $\endgroup$ – 1muflon1 Nov 14 '20 at 21:51
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    $\begingroup$ economics.stackexchange.com/q/40725/11590 may also help you. $\endgroup$ – Bayesian Nov 15 '20 at 15:33

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