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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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 ...
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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 ...
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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 ...
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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 ... 1 vote 0 answers 39 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 ...
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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 ...
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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 =...
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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 ...
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### 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, ...
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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 ...
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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 ...
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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 ...
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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 ...
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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 ...
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### 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 ...
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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 ...
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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, ...
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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 ...
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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 ...
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For PPP & LOOP: e = EP/P* = 1 So both are valid if goods in the US and EU cost the same in $for example. But then, what exactly is the difference between both? 3 votes 1 answer 553 views ### How to adjust salaries of more than two countries to a common year given that the data was collected in different years? I want to compare salaries of more than two countries. The data I am using is based on the Occupational Wages around the World (OWW) database. Let's say I want to look at the salaries of the nurse. ... • 31 1 vote 2 answers 378 views ### What exactly is purchasing power parity (PPP)? I have some questions regarding what exactly PPP is. In my understanding, PPP is essentially the value that a currency can purchase within an area. For example, although the USA might have more money ... • 11 0 votes 1 answer 428 views ### How to calculate constant GDP in international$ 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, ...
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### 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 ...
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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 ...
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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 ...
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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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### What will I see of the €545 from TTIP?

According to this TTIP paper, a European family of four will see their annual disposable income increase by €545 on average: These gains can also be translated into household disposable income. ...