New answers tagged

2

No purchasing power is not created from thin air. When you convert money through PPP (expressed usually in terms of local currency to USD) you are getting information about what is the purchasing power of US dollar that would get you the same basket of goods under the law of one price. This is not the same as making currency conversion with exchange rate ...


0

A very interesting way to put this. But, I think, you are forgetting the cost incurred by the Indian guy. By buying the service from India in 100 USD, the US man is letting go of goods/services worth 100 USD in USA. So this service/product must be giving him the utility worth that much. On the other hand, the Indian is charging 100 USD as that must the ...


-1

Inflation is exactly no more and no less than the law of supply and demand applied to money. Print funny money to enlarge the supply then the value of all money will be less. Hyperinflation occurs when it is done to extreme and people are finally concerned about it enough to act. The only way to stop it is with a balanced budget. That means tax people as ...


5

You can generally stop hyperinflation in very similar way as any inflation. It is generally accepted by economic profession that price level $P$ (change in which is by definition inflation) in an economy is determined by money market equilibrium. In turn a simplified model of money market equilibrium can be given by the following equation of exchange (see ...


0

From your question, it appears that PPP (purchasing power parity) is not important to you. Instead, you want to know what countries' products are cheap for you at market exchange rates. The bad news: goods that are traded internationally don't see much price difference from country to country (especially after correcting for transportation costs). So if you ...


3

I believe 1muflon1's answer is sufficient, but let me add a fun exercise The Economists does for quite a while now, the Big Mac Index. It is less of a scientific than a fun metric for PPP. If you are not interested in milk per se, but would be fine with Big Macs as well, here you go: https://www.economist.com/news/2020/07/15/the-big-mac-index. They update it ...


4

Money does not have any 'immanent value'. Value of money will fluctuate across time and also different regions (1USD does not have the same purchasing power in New York as it has in Arizona). This being said there are ways of doing international purchasing power comparisons that go beyond simple market exchange rate that can sometimes be misleading. ...


Top 50 recent answers are included