Topic
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.
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TL;DR: In this paper, the authors compared a range of methods including currency conversion and purchasing power parity (PPP), and found that purchasing power is the preferable theoretical base for international cost conversion, and currency conversion is not recommended.
Abstract: Purpose – Project cost is normally a key performance indicator for all projects, and therefore features prominently in benchmarking exercises aimed at identifying best practice. However, projects in different locations first require all costs to be expressed in equivalent units. Failing to do this leads to erroneous and unreliable results. The paper aims to discuss these issues. Design/methodology/approach – Applying international construction as the focus for the study, cost data from 23 cities worldwide are compared using a range of methods including currency conversion and purchasing power parity (PPP). Coefficient of variation (CoV) forms the test for identifying the method with the lowest volatility. Findings – It is found that purchasing power is the preferable theoretical base for international cost conversion, and currency conversion (frequently used by practitioners) is not recommended. The citiBLOC PPP method has the lowest CoV across the data set and therefore more closely reflects the Law of O...
10 citations
TL;DR: Addiopizzo as discussed by the authors is a grassroots anti-mafia movement based in Palermo that stresses the individual consumer's responsibility for maintaining the Sicilian mafia's pizzo system, if you purchase products from a business that pays the pizzo you are indirectly supporting the mafia.
Abstract: ‘Addiopizzo’ (Goodbye protection money) is a grassroots anti-mafia movement based in Palermo that stresses the individual consumer's responsibility for maintaining the Sicilian mafia's pizzo system. If you purchase products from a business that pays the pizzo you are indirectly supporting the mafia. By encouraging Palermitans to buy from ‘pizzo-free’ businesses, Addiopizzo uses the purchasing power of the consumer to fight organised crime. The community of ‘pizzo-free’ businesses is small but steadily growing whilst the number of critical consumers pledging to buy their products appears to have peaked. This article aims to investigate the reasons why consumers may be reluctant to support ‘pizzo-free’ businesses by asking those who have already made public their decision to do so. Whilst critical consumers cannot fully explain why the majority of Palermo's citizens continue to tolerate the pizzo system their attitudes towards them do highlight differences that may help to account for wider non-participatio...
10 citations
30 Jun 2014
TL;DR: The Big Mac Index has been used as a rule of thumb to determine the over- or under-valuation of international currencies based on the theory of purchasing power parity since 1986.
Abstract: The Economist magazine has been publishing the Big Mac Index using it as a rule of thumb to determine the over- or under-valuation of international currencies based on the theory of Purchasing Power Parity since 1986. According to the theory, using the Big Mac as a tradable single-good basket, the Dollar-value of the hamburger should be equalized around the world due to arbitrage. The popularity and following of the Big Mac Index led the authors to the following two questions: 1) How effective is the Big Mac price as an indicator of overall inflation? and 2) how accurate are exchange rate movement predictions based on Big Mac prices? They find that Big Mac prices tend to lag overall inflation rates, which is highly important in studies that use Big Mac prices as measures of affordability or real incomes over time. As a guide to exchange rate movements, there is support for the theory of Purchasing Power Parity, but only as a qualitative indicator of movement in the nominal exchange rate in rich and economically stable countries, proving less effective in forecasting exchange rate movements in emerging markets. The statistical analysis is carried out using data from 1986 to 2012 from The Economist and from the World Bank for 54 countries. The importance of these findings lies on the widespread use of the index and thus perpetuation of perceptions on the relative value of currencies in the areas of corporate finance, international trade and finance, and international business.
10 citations
TL;DR: In this article, a distinction is made between three different types of cost inflation: exogenous cost impulses; competing income claims, both by way of bargaining in markets and by competition in the political arena; and attempts to preserve the purchasing power of income.
Abstract: SUMMARY
This paper is intended to highlight the role of cost increases in the inflation process. In the course of the analysis a distinction is made between three different types of cost inflation: (i) exogenous cost impulses; (ii) competing income claims, both by way of bargaining in markets and by competition in the political arena; and (iii) attempts to preserve the purchasing power of income. Each category is discussed in some detail. The paper also discusses alternative methods of fighting cost inflation, including some issues pertaining to cost-accommodating demand management and incomes policy.
10 citations
TL;DR: In this paper, the authors focus on Fisher's analysis on the stability of money value and his position in the debate on the compensated dollar from 1909 to 1922, and study the anticipations of Fisher's compensated dollar, the receptions and evolutions of Fisher’s project, the gold exchange standard and the algebraic evidence.
Abstract: In 1911, Fisher published The Purchasing Power of Money. In chapter 13 of the first edition and in an appendix in the second section of 1913, he introduced a rule to maintain the level of prices stable, called the “compensated dollar”. According to this rule, the legal definition of money is changed. In other words, the weight in gold of the dollar is modified once a month in order to impede the price changes on a basket of goods. According to Fisher, this plan will offer stability in the purchasing power of money. He sought after to find an alternative system to the price fix system under the Gold Standard. He wanted to introduce a dollar fixed in his purchasing power, but variable in its metallic weight. In this paper we will focus on Fisher’s analysis on the stability of money value and his position in the debate on the compensated dollar from 1909 to 1922. We will study the anticipations of Fisher’s compensated dollar, the receptions and evolutions of Fisher’s project, the gold exchange standard and the algebraic evidence. We also study the debate links to the question if the compensated dollar plan match or not with the quantity theory of money. We ends with the analysis of the gold price and elasticity of gold net supply, and we explain the relation between the Yellowbacks and the varying price of the gold reserve.
10 citations