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Questions tagged [purchasing-power-partity]

Purchasing power parity (PPP) is the rate of currency conversion that equalizes the purchasing power of different currencies, by eliminating the differences in price levels between countries.

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How does Turkey have higher labour productivity than Portugal and Romania but lower GDP per capita PPP?

I avoided using nominal GDP per Capita because of Lira devaluation. Here is the labour productivity of Turkey, Portugal, Romania and some other countries (2022) https://data.oecd.org/lprdty/gdp-per-...
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Purchasing power parity and cointegrating vectors

I am testing for the existence of purchasing power parity (PPP) relationships using cointegration tests, among others, and I am a bit tempted to test whether or not my cointegrating vectors are equal ...
Pavel Filip's user avatar
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Seeking Insights on Cross-Country Savings Behavior Analysis: Addressing Income Distribution and Purchasing Power Parity Challenges

I possess data from various countries, including a diverse mix such as the USA, Slovenia, and Chile, covering a wide range of GDP per capita levels. This data encompasses individual and household ...
Jack's user avatar
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Purchasing power of US dollar during its history

Is there an online tool to calculate how many goods (and which ones, of course) I could buy in a specific year in the past, e.g., 1792, 1800, 1810, 1820, and so on for a given number of US dollars? ...
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Cost of money in historical prose

When reading British prose, e.g. a novel by Daniel Defoe (1660-1731) or P. G. Wodehouse (1881-1975), I would like to understand the real cost of money there, which have been changed over time, of ...
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Currency vs purchasing power?

When I search the internet about which is the strongest currency, the answer is the currency which buys more from other currencies. For example if 1 euro can buy 10 dollars then euro is a stronger ...
entropyfeverone's user avatar
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Do polish people have more purchasing power than that of the Irish?

The following table was taken from data.oecd.org: This link gives the Big Mac index. Big Mac Index of Ireland = 4.61 Big Mac Index of Poland = 2.65 Does this mean that Polish people in Poland have ...
user366312's user avatar
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How to make sense of Lebanese currency values in USD with a PPP conversion factor?

For example, I have data from a survey of adult citizens in 2014 showing an average annual salary of about 20000 LCU. I would like to find a comparable measure of the standard of living in Lebanon ...
Odin's user avatar
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Why is there such a big difference of purchasing power toward Coca-Cola between Euro in France and USD in USA, comparing to Big-Mac?

I have an assignment that requires me to pick an item and use it to create my own price level index, similar to Big-Mac index. In March 2021, the price of 0.5 litre Coca-Cola in France was 0.97 Euro ...
martinrhan's user avatar
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What are the main causes of disparity between nominal and PPP exchange rates?

(I'm not a student of economics and I have no idea about correct terminology and things. ) I've seen the acronym "PPP" in various places for a long time, but it's only recently I became ...
merni's user avatar
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Price level and purchasing power of currency(PPP)

This could be a silly question, but I'm a bit confused with this concept. Don't we say usually the purchasing power(or value) of currency(or money) is low when the price level is high in one country(i....
modernyoon's user avatar
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Comparing Real GDP with different base years and currencies

I have a quarterly panel data of several countries. I have taken the data from Fred. Some countries' real gdp is in chained 2010 prices and some in other years (such as 2015 and 2018). How can I make ...
festakonik's user avatar
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Creating a pragmatic, useable (not theory heavy) proxy for a currency basket for a set of economies

This is currently, a gedanken experiment, but may well form the basis of a whitepaper - or better still, an actual project. I am trying to come up with a practical way of creating a "currency ...
Homunculus Reticulli's user avatar
1 vote
1 answer
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Big Mac Index based on other products or services?

The Big Mac Index compares the cost of a McDonalds Big Mac in different currencies around the world. In doing so, it provides: an informal way of measuring the purchasing power parity (PPP) between ...
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Is wealth created when money is transferred from a wealthy country to a less wealthy country?

Imagine a person based in India is working for a client in the USA. The client pays the person 100 USD. The currency is converted into INR, which turns out to be 100 * 74 = 7400 INR. But if we convert ...
Snehanshu Phukon's user avatar
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How do you stop Hyperinflation in a Nation?

In history, I learned that the Weimar Republic had hyperinflation as a consequence of leading and striving war during World War I and placed a new currency named German Rentenmark which would be about ...
Gregory's user avatar
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Measure of value of a product expressed as a price using the currency of the domain country (e.g. USA)

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 ...
kikatuso's user avatar
4 votes
3 answers
294 views

In which country does my money have the largest purchasing power?

To be honest i have literaly zero economic knowlegde so please treat me as a noobie in this case. Here is the questin: I live in Poland where my native currency is polish zloty (PLN), and i want to ...
user2981093's user avatar
2 votes
1 answer
85 views

What is the best way to compare the price of a GB of internet across countries

I have the average price of a GB of data / internet across 45 different countries. I want to be able to compare the price of using data on the people in that country. Let's say 1 GB of data costs 1.37 ...
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What is the best measure for the world's economic cycle?

I'm trying to make a graph that shows how the return of major assets (S&P 500 index, % of 3Y T-notes, oil, gold, etc) move along with the world's expansion& recession cycle. I looked into ...
user8491363's user avatar
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Is there any up-to-date list of hours of work needed to buy a Big Mac?

Is there any up-to-date list of hours of work needed to buy a Big Mac? I have found only up to 2018.
user366312's user avatar
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Why is Pakistan's GDP higher than Bangladesh in PPP but lower in Nominal?

Why is Pakistan's GDP higher than Bangladesh in PPP but lower in Nominal? Kindly explain in layman's terms.
user366312's user avatar
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How are PPP, nominal exchange rates and inflation related?

This Forbes article discusses how changes in the market exchange rate can be used to estimate an inflation rate thanks to the principle of purchasing power parity (PPP). Can someone distill this ...
StatsScared's user avatar
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If a Chinese person wants to buy an iPhone or any international goods, which GDP per capita would be a better indicator?

Which GDP per capita of a Chinese citizen would better reflect their affordability- Nominal GDP per capita or PPP GDP per capita of China? My question is would PPP would matter much in case of buying ...
Jay's user avatar
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How long can I live in the United States with my German monthly income?

I see different (more or less abstract resp. specific) approaches to compare wealth (of individuals, regions, and countries): by living standards by living expenses by incomes/salaries by purchasing ...
Hans-Peter Stricker's user avatar
1 vote
1 answer
480 views

How to calculate PPP$ from LCUs?

Is there one single formula which allows to calculate the income of a person in PPP\$ from her income in LCUs (local currency units), given for example the PPP conversion factor, GDP (LCU per ...
Hans-Peter Stricker's user avatar
1 vote
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64 views

Meaning of PPP conversion factors

How do I interpret the numbers of this table PPP conversion factor, GDP (LCU per international $) as published by the World Bank: First of all, it's just numbers, but what do they tell (in common ...
Hans-Peter Stricker's user avatar
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1 answer
151 views

Purchasing Power Parity and Baskets of Goods

On the exact definition and understanding of "purchasing power parity" it depends what it means when the World Bank defines the “extremely poor” people of the world as those who are currently ...
Hans-Peter Stricker's user avatar
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Relationship between Growth in Purchasing Power and Real Interest Rate equations

My textbook gives these two equations including the real interest rate and says that the second equation (b) can be arrived at from the first (a), but doesn't explain how. rr = Real Interest Rate, r =...
P A N's user avatar
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Would PPP adjustments between countries be irrelevant if all countries had the same relative prices?

I'm trying to understand the relationship, if any, between the fact that countries have different relative prices (e.g. different 'food price-to-general consumer prices' ratios) impacts the need for ...
StatsScared's user avatar
0 votes
1 answer
116 views

Convert USD2005 PPP per-capita GDP to USD2011 PPP per-capita GDP for a number of countries

Which conversion factor / formula should be used to convert USD2005 PPP per-capita GDP to USD2011 PPP per-capita GDP for different countries? I have found an identical question, but without a clear, ...
Jackk's user avatar
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How to read PPP$ aloud?

How to read PPP$ aloud? That is in a paper that I should read loud in a presentation, but I don't know the most Is it "purchasing power parity in US Dollar," or "purchasing power parity in terms ...
Sasan's user avatar
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Does PPP measure conversion taken into account government service and taxes?

Apology in advance if this question seems too elementary. I am intrigued by this article I came across,Do We Care About Income Inequality, or Absolute Well-Being? And in the article the author was ...
jxhyc's user avatar
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How purchasing power reduces when currency is commodity money(say gold)

First of all I am new to Economics. I'm a B.Sc.(Mathematics) final year student. I was curious to learn Economics so I started with "Economics in one lesson" by Henry Hazlitt. In this book I ...
Singh's user avatar
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What does it mean if country X has a higher GDP at Purchasing Power Parity (PPP) than country Y?

I understand the implications of having a higher/lower GDP at market exchange rates. I also understand what PPP measures. But, what does a difference in GDP, at PPP, indicate in terms of differences ...
StatsScared's user avatar
1 vote
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Devaluation of exchange rate meaning

Pilbeam's textbook on International Finance (p. 106) says: (...) the immediate effect of a devaluation of exchange rate from $S_1$ to $S_2$ is to make domestic good competitive (...) How can be ...
toyo10's user avatar
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How to address PPP when doing price comparison across countries?

I'm measuring some very specific items (across 5 countries) using my country's currency as the base. My questions are: How should I address PPP in this case? (Is it just like the example in Table 1 ...
Karie's user avatar
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4 votes
2 answers
251 views

Can PPP adjusted values be compared over time?

I'm a little baffled about this: Let's say I want to compare the average income of 2 countries, A and B. Of course I'm interested in the real income so I adjust to PPP using the big mac index of that ...
RiskyMaor's user avatar
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Estimating national intangible wealth

I seem to recall reading about the following research regarding "national intangible wealth" (IIRC): For each country, compute the GDP. Convert the GDP to "total national capital" using an interest ...
sds's user avatar
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2 votes
2 answers
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PPP / currency evaluation

An economics book has the following example: In the USA, a Big Mac sells for 1 USD, while in Germany it sells for 3 EUR. The "fair" FX relation would therefore be 1 USD = 3 EUR. At the FX market, ...
Thorsten's user avatar
3 votes
0 answers
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What would be the consequences of universal parity of buying power (wage value) and freedom to buy?

I've wondered about this for many, many, years..... maybe there's an answer (or several answers?) after all. As the global economy is set up, one reason a person in the US and EU can afford a nice ...
Stilez's user avatar
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Conversion of GDP PPP International \$ 2005 into GDP PPP International \$ 2011

Essentially I have two different datasets that I'm trying to consolidate. One set of data comes from the World Bank Databank, and is a set of historical GDP PPP values for all countries expressed in ...
Anthony S.'s user avatar
1 vote
1 answer
2k views

What exactly is the difference between the PPP ("purchasing power parity") and LOOP ("law of one price")?

For PPP & LOOP: e = EP/P* = 1 So both are valid if goods in the US and EU cost the same in $ for example. But then, what exactly is the difference between both?
visionInc's user avatar
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How to adjust salaries of more than two countries to a common year given that the data was collected in different years?

I want to compare salaries of more than two countries. The data I am using is based on the Occupational Wages around the World (OWW) database. Let's say I want to look at the salaries of the nurse. ...
soeci92's user avatar
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1 vote
2 answers
435 views

What exactly is purchasing power parity (PPP)?

I have some questions regarding what exactly PPP is. In my understanding, PPP is essentially the value that a currency can purchase within an area. For example, although the USA might have more money ...
physics's user avatar
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How to calculate constant GDP in international $ from nominal GDP in local currency units

I want to calculate a constant GDP serie from 1995 till 2014 based on nominal GDP expressed in Yuan (Chinese currency). I already get stuck on how to first make a constant GDP serie based on Yuan, ...
MaartendeG's user avatar
4 votes
1 answer
358 views

How are purchasing power parity (PPP) conversions computed?

How are purchasing power parity (PPP) conversions computed? I guess that goods' and services' prices are compared across different countries/currencies. However, there are services such as healthcare ...
drake's user avatar
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Questions on comparing GDP between various countries

What is the difference between OER vs PPP? What fundamentally drives them? Shouldnt an arb opportunity exist and wouldnt that difference then go away? My understanding of OER is the official nominal ...
bob's user avatar
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1 vote
1 answer
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Converting a GDP series to constant international dollars

I want to convert a GDP series (I have it in current euros) of a country to constant 2005 international dollars. My idea is to divide the series by year 2005's $PPP$ conversion factor (the exchange ...
Xlrv's user avatar
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2 answers
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Where to find more detailed data for International Comparison Program 2011?

According to the World Bank PPP conversion factors, in 2014, 0.86 SGD could buy as much stuff in Singapore as could 1 USD in the USA (presumably Averagetown, USA). The market exchange rates in 2014 ...
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