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.

An Assessment of the Impact of Rice Tariff Policy in Indonesia; A Multi-Market Model Approach

Abstract: Rice is of key importance to Indonesia’s national and household level food security. The choice of tariff policy has important implications for consumers and producers with policy makers having to decide between the trade-offs implied for the various stakeholders. In this study we use a multi-market model to assess the impact of hypothetical rice tariff changes on household welfare and other variables of interest to rice policy-makers. A reduction in the rice tariff from 30 to 0% reduces rice supply and wheat demand and stimulates rice demand and soybean supply. Rice imports increase from 0.8 to 2 million tons. Rural households except for the Java-top income group, see incomes fall. In terms of purchasing power all households gain very significantly. Eliminating rice tariffs increases crop diversification and more so in those areas and for those income groups which started off least diversified. It is clear that the higher retail rice price resulting from a 30% ad-valorem tariff rate imposes significant cost on the 90% of Indonesian households, including most of the very poor households, who are net rice buyers. The implied income gains appear relatively modest but do accrue to middle and poorer households especially in Java. On the other hand an increase in the tariff from 30 to 50% eliminates rice imports, reduces soybean output and stimulates wheat demand. Rural households, except for the Java-top income group, see incomes rise although the effect is relatively modest. In terms of purchasing power households are all worse off.

A Micro-Empirical Foundation for the Political Economy of Exchange Rate Populism

Abstract: Latin American countries have experienced cycles of expansionary policies, currency appreciation, and crises. The popularity of appreciations, through their effect on consumers' purchasing power, has been an accepted assumption in the literature despite a dearth of studies on the distributional impact of exchange rate movements. This study computes the welfare effects of exchange rate movements at different points of the income distribution for Brazil and Mexico. It shows that the distributional effects of appreciations split both countries on a regional basis, instead of across income levels. In Brazil, appreciations are found to benefit less or harm more the rural areas; in Mexico, they benefit less or harm more the Northern border states.

PPS and EU Regional Price Level Problem

Abstract: The Purchasing Power Standard (PPS) is widely used for economic analyses, studies and strategic documents in the European Union. Although it is a necessity to take the purchasing power i.e. price level into consideration the state of art of PPS is not usable at regional level. The current PPS is not reflecting regional prices but is based on one country price level. This might lead to serious imperfections and misspecifications especially in relation to regionally oriented policies like the Cohesion Policy. Using PPS for analyzing convergence reveals quite puzzling conclusions which are supporting this possible problem of PPS. It is vital for the EU policies to become efficient to compute new regional price levels or to substantially modify current PPS.

Monetary Economics, History of

Abstract: As with so much else in the Western tradition, theorizing about the role of money can be traced back to Plato and Aristotle in the fourth century bce, although they may have drawn on pre-Socratic philosophers whose works survive, if at all, only in fragments. In his Republic (1974), Plato remarked that money was a symbol devised to make exchange easier. He disapproved of gold and silver as money, preferring a currency that would have value only internally, not in external commerce. The analysis in Aristotle’s Nicomachean Ethics (1996) and Politics (1984) of what constitutes just exchange led Aristotle to a more systematic discussion of a medium of exchange. His account of the functions of money, and of the properties that suit a commodity such as gold or silver to be the medium of exchange, as well as his use of the myth of Midas to distinguish between gold and wealth, influenced comparable presentations by Nicolas Oresme in about 1360 (Oresme, de Sassoferrato and Buridan, 1989), Adam Smith (1776), and, through Smith, any number of 19th-century textbooks (see Menger, 1892; Monroe, 1923). Barter might be the most basic form of exchange, but it involves accepting goods one does not wish to consume in order to make a further exchange for what is desired. Aristotle noted the convenience of a generally accepted medium of exchange in reducing the number of transactions required. He saw the convenience of stating prices in terms of the medium of exchange, and that, if a commodity is to serve as a medium of exchange, it must also be a store of value, retaining purchasing power between being received and being spent (but he did not mention the function of money as a standard of deferred payment).