Questions tagged [purchasing-power-partity]

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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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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 ...
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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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1answer
267 views

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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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?
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What goods are included in the ICP classification?

I would like to find out what goods are compared across countries in the International Comparison Programme in order to calculate purchasing power parities. I know there are possibly thousands of ...
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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. ...
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294 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 ...
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324 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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414 views

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. ...
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In the US, do high wages in regions like New York and California offset the high cost of living?

It's well understood that the cost of living in New York City vastly exceeds the cost of living in, say, rural Louisiana. It is also well understood that wages in New York City vastly exceed those in ...
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Nominal GDP versus PPP in comparing military spending of different countries?

Military spending as percentage of GDP is the most used measure of the economic capability of a certain country/military. But Some countries like India for example, have a huge difference between ...
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Ratios to determine company's current purchasing power

what are the parameters which will affect a company ability to buy a new product based on its current financial situation. Is there any metrics or ratios which will tell the current company ...
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Real Exchange Rate vs PPP rate

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 ...