Purchasing power

About: Purchasing power is a research topic. Over the lifetime, 2714 publications have been published within this topic receiving 36866 citations. The topic is also known as: adjusted for inflation.

Estimating Income/Expenditure Differences Across Populations: New Fun with Old Engel's Law

Abstract: How much larger are the consumption possibilities of an urban US household with per capita expenditures of 1,000 US dollars per month than a rural Indonesian household with per capita expenditures of 1,000,000 Indonesian Rupiah per month? Consumers in different markets face widely different consumption possibilities and prices and hence the conversion of incomes or expenditures to truly comparable units of purchasing power is extremely difficult. We propose a simple supplement to existing purchasing power adjusted currency conversions. The Pritchett-Spivack Ratio (PSR) estimates the differences in household per capita expenditure using a simple inversion of the Engel’s law relationship between the share of food in consumption and total income/expenditures. Intuitively, we ask: "How much higher (as a ratio) would the expenditures of a household at 1,000,000 Indonesian Rupiah need to be along a given Engel relationship before they were predicted to have the same food share as a US household with consumption of 1,000 US dollars?" The striking empirical stability of Working-Lesser Engel coefficient estimates across time and space and widely available estimates of consumptions expenditures and hence food shares allow us to make two robust points using the PSR. First, the consumption of the typical (median) household in a developing country would have to rise 5 to10 fold to reach that of a household at the poverty line in an OECD country. Second, even the "rich of the poor" — the 90th or 95th percentile in developing countries — have food shares substantially higher than the "poor of the rich."

The Nexus between Exchange Rate Variation and Economic Growth in Nigeria

Abstract: This research paper is centered on the nexus between exchange rate variation and economic growth in Nigeria with emphasis to the purchasing power of the average Nigerians and the level of international transaction. Exchange rate fluctuations have been of serious concern to the monetary authorities, policy makers and business tycoons of developing countries, Nigeria inclusive because of the relevance of exchange rate in international trade, investment and in determining the level of output growth of a country. Therefore it is vital to examine the degree at which exchange rate fluctuates which had called for a lot of attention in Nigeria. This study examined the Impact of Exchange Rate Fluctuation on the Nigerian Economic Growth using an annual data of forty-three (43) years covering the period (1970-2013). The standard deviation method was employed to capture and estimate the fluctuation inherent in the model as regards the research’s objective. The study employed econometric techniques such as; Multiple Regression Model, Augmented Dickey Fuller (ADF) test, Johansen Co-integration test and the Error Correction Model (ECM). Evidence from this study exhibited that there exists a positive but insignificant impact of exchange rate fluctuation on Nigerian economic growth in both the long run and short run. This result is attributed to the ability of the Nigerian government to effectively regulate some other important macroeconomic variables which can infuriate exchange rate which has thereby helped curtail the effects of exchange rate fluctuation during the study period. This is an indication that monetary authorities might have initiated policies that helped absorb the influence of exchange rate fluctuation on economic growth in Nigeria. Therefore, the government should encourage domestic production of goods and services for Naira exchange rate appreciation and generally to promote economic growth in Nigeria- moreover to maintain and sustain exchange rate and economic stability. In the same vein, the government should pay more attention to other more volatile macroeconomic variables like oil price and inflation rate in Nigeria. Research paper Keywords: Exchange Rate, Exchange rate fluctuation, Economic growth, Purchasing power, Macroeconomic variables Reference to this paper should be made as follows: Amassoma, D. (2017). “The Nexus between Exchange Rate Variation and Economic Growth in Nigeria”, Journal of Entrepreneurship, Business and Economics, Vol. 5, No. 1, pp. 1–40.

Comparative Indian economic growth: 1870 to 1970.

Abstract: In 1870 the Indian per capita income was about Rs. 30 compared to Rs. 450 for England. Studies of Indian national income show estimates of per capita income which show no gain or a small decline from 1879 to 1970. Estimates of .5% per annum growth seem high in light of recent analyses of Indian history. Indias decline suggests that rapid growth in other areas e.g. Japan Europe and the U.S. has had deleterious effects. The 1871-1911 growth rate was about .7% per year 1911-46 no growth and from 1947-70 about 1% per year. Population growth was 254 million in 1870 305 million in 1920 and 668 million in 1970 for India and Pakistan. Growth of real per capita income in constant prices are estimated at 1.00 in 1870 1.75 in 1970. In the U.S. in the same period the index may have moved from 1.00 to 5.70. Purchasing power estimates put India higher than comparisons based on exchange rates however. As countries grow the productivity in traded goods will tend to decline. The exchange rate is determined by the relative price of traded goods in a year. Since goods in the U.S. are relatively cheap Indias exchange rates look poorer than real terms of purchasing power equities. The perception of the extra resources required to equalize incomes between countries are different and much less when real incomes are compared.

The Aggregation Problem in the Employment Theory: The Representative Individual Model or Individual Employees Model?

Abstract: Employment theory does lacks a consensus concerning whether employment variation should be expressed as a change in the hours worked as a representative individual or as a change in the population of employed individuals. By appling the OLG model developed by Lucas [1] and Otaki ([2-4]), the present article describes a serious theoretical conesquence of distinction. The crucial factor that different employment theories are the intertemporal substitution effect and the indivisibility of labor force. Monetary expansion increases the rate of return for money if it is credible in the sense of Otaki [5]. This enhances the hours worked in the representative individual model, and thus, aggregate supply causes demand. Conversely, in the indivisible employees model, such an intertemporal substitution effect does not exist. The monetary expansion directly improves the purchasing power of money and thereby increases the aggregate demand for goods by the older generation. Thus, demand derives supply.

Structure and Development Strategies of the Manufacturing Industries in Singapore and Hong Kong: A Comparative Study

Abstract: IN THE PAST two to three decades, both Singapore and Hong Kong have achieved impressive rates of economic growth matched by few developing nations. As a result they have been dubbed, respectively, the "Singapore Model" and the "Hong Kong Model." In both cases manufacturing growth has played a major role in the process together with an expansion of manufactured exports. Manufacturing contributed 22.4% to Singapore's Gross Domestic Product in 1979 and 24% to Hong Kong's GDP in 1977; in 1978, employment in manufacturing accounted for 28.7% of the total employed labor force of Singapore and 39.7% in Hong Kong. High growth rates of manufacturing output and real GDP together with very low unemployment rates are also characteristic of the two expanding economies. It has been claimed that objective conditions that is, the lack of natural resources except for strategic locations, excellent ports, and industrious labor forces forced the two city-states to orient their manufacturing industries toward export markets. Furthermore, the domestic market in each instance is not large enough to serve as the initial base for industrialization. There is some truth in these arguments, but they are by no means the only conditions that set the stage for growth. For example, when Hong Kong began industrializing in 1950, it had a population of two million and a relatively high per capita income derived from trade. Similar conditions prevailed in Singapore when it launched its industrialization program in the 1960s, although its population was smaller. Measured by purchasing power, these domestic markets were larger than those of many developing nations that had embarked on pro