Purchasing power parity
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Purchasing power parity (PPP) is an economic theory and a technique used to determine the relative value of currencies, estimating the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to (or on par with) each currency's purchasing power. It asks how much money would be needed to purchase the same goods and services in two countries, and uses that to calculate an implicit foreign exchange rate. Using that PPP rate, an amount of money thus has the same purchasing power in different countries. Among other uses, PPP rates facilitate international comparisons of income, as market exchange rates are often volatile, are affected by political and financial factors that do not lead to immediate changes in income and tend to systematically understate the standard of living in poor countries, due to the Balassa–Samuelson effect.
- See also: Wikipedia
| Penn World Table Penn World Table pwt.econ.upenn.edu - Web |
| Explanations from the U. of British Columbia Explanations from the U. of British Columbia fx.sauder.ubc.ca/PPP.html - Web |
| OECD Purchasing Power Parity estimates OECD Purchasing Power Parity estimates www.oecd.org/std/ppp - Web |
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| Purchasing power parities as example of internatio... Purchasing power parities as example of international statistical cooperation epp.eurostat.ec.europa.eu/.../Purchasing_power_parities_as_example_of_international_statistical_cooperation - Web |
| World Bank International Comparison Project World Bank International Comparison Project www.worldbank.org/data/icp - Web |
| UBS's "Prices and Earnings" Report 2006 UBS's "Prices and Earnings" Report 2006 www.ubs.com/.../wealth_mgmt_ch?contentId=103982&name=eng.pdf - Web |
| "Understanding PPPs and PPP based national account... "Understanding PPPs and PPP based national accounts" pwt.econ.upenn.edu/.../deaton%20heston%20complete%20nov10.pdf - Web |
