Purchasing power

Abstract: A new global energy landscape is emerging, resetting long-held expectations for our energy future. Incorporating these recent developments and world-class analysis, World Energy Outlook 2013 presents a full update of energy projections through to 2035 and insights into what they mean for energy security, climate change, economic development and universal access to modern energy services. Oil, coal, natural gas, renewables and nuclear power are all covered, along with an update on developments in subsidies to fossil fuels and renewable energy. This year World Energy Outlook also gives a special focus to topical energy sector issues: -Redrawing the energy-climate map: the short-term measures that could keep the 2°C target within reach, and the extent to which low-carbon development could leave fossil-fuel investments stranded. Special report to be released 10 June. -Energy in Brazil: how a vast and diverse resource base – from renewables to new offshore discoveries – can meet the growing needs of the Brazilian economy and open up new export markets. -Oil supply, demand and trade: a fresh look at the economics and decline rates of different types of oil production around the world, the prospects for light tight oil inside and outside North America, along with new analysis of oil products and the refining sector. -The implications for economic competitiveness of the changing energy map: what the major disparities in regional energy prices might mean for major energy-intensive industries and the broader impact on economic growth and household purchasing power. -The global spread of unconventional gas supply, including the uptake of the IEA “Golden Rules” to address public concerns about the associated environmental and social impacts. -Energy trends in Southeast Asia, a region that is exerting a growing influence in the global energy system. Special report to be released 23 September. The World Energy Outlook is recognised as the most authoritative source of strategic analysis of global energy markets. It is regularly used as input to the development of government policies and business strategies and raises public awareness of the key energy and environmental challenges the world is facing.

Abstract: We explore the impact of reduced transaction costs on risk sharing by estimating the effects of a mobile money innovation on consumption. In our panel sample, adoption of the innovation increased from 43 to 70 percent. We find that, while shocks reduce consumption by 7 percent for nonusers, the consumption of user households is unaffected. The mechanisms underlying these consumption effects are increases in remittances received and the diversity of senders. We report robustness checks supporting these results and use the four-fold expansion of the mobile money agent network as a source of exogenous variation in access to the innovation. (JEL E42, G22, O16, O17, Z13) In developing countries, informal networks provide an important means by which individuals and households share risk, though the insurance they provide is often incomplete. Economists have proposed a number of reasons for this incompleteness, including information asymmetries, which manifest in problems of moral hazard, and limited commitment, both of which induce positive correlations between realized income and consumption. In this article we emphasize a complementary source of incompleteness: transaction costs—literally, the costs of transferring resources between individuals. We test the impact of transaction costs on risk sharing by analyzing data from a large panel household survey that we designed and administered in Kenya over a three-year period to capture the expansion of “mobile money.” This financial innovation has allowed individuals to transfer purchasing power by simple short messaging service ( SMS) technology and has dramatically reduced the cost of sending money across large distances. Mobile money is a recent innovation in developing economies—one of the first and most successful examples to date is Kenya’s “M-PESA.” 1 In just four years after its

Abstract: Four billion low-income people, a majority of the world's population, constitute the base of the economic pyramid. New empirical measures of their behavior as consumers and their aggregate purchasing power suggest significant opportunities for market-based approaches to better meet their needs, increase their productivity and incomes, and empower their entry into the formal economy. The 4 billion people at the base of the economic pyramid-all those with incomes below $3,000 in local purchasing power-live in relative poverty. Their incomes in current U.S. dollars are less than $3.35 a day in Brazil, $2.11 in China, $1.89 in Ghana, and $1.56 in India.1 Yet together they have substantial purchasing power: the BOP constitutes a $5 trillion global consumer market.

Abstract: This paper reviews and analyzes the empirical record of exchange rates and prices during the 1970's and the analysis is based on the experience of the Dollar/Pound, the Dollar/French Franc and the Dollar/DM exchange rates. Section 2 presents the evidence on PPP during the 1970's and contrasts it with the evidence from the 1920's -- a period during which the doctrine held up reasonably well. This analysis is relevant for assessing whether the flexible exchange rate system was successful in providing national economies with an added degree of insulation from foreign shocks, and whether it provided policymakers with an added instrument for the conduct of macroeconomic policy. The evidence regarding deviations from purchasing power parities is also relevant for determining whether there is a case for managed float. Section 3 attempts to explain what went wrong with the performance of the doctrine during the 1970's. It examines the hypothesis that the departures from PPP are a U.S. phenomenon, as well as the hypothesis that the departures are due to large changes in inter-sectoral relative price changes within the various economies. Given that the predictions of the simple versions of PPP do not hold up, section 4 proceeds in examining the question of whether national price levels have been independent of each other. Section 5 addresses the question of whether exchange rates and national price levels are comparable and whether in principle one should have expected them to be closely linked to each other. The main point that is being emphasized is that there is an important intrinsic difference between exchange rates and national price levels which stems from the basset market theory' of exchange rate determination. This theory implies that the exchange rate, like the prices of other assets, is much more sensitive to expectations concerning future events than national price levels and as a result, in periods which are dominated by news' which alter expectations, exchange rates are likely to be much more volatile than national price levels and departures from PPP are likely to be the rule rather than the exception. Finally, section 6 concludes the paper with some policy implications.