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.

Britain's Return to Gold and Entry into the EMS: Expectations, Joining Conditions and Credibility

Abstract: In this paper the surprising conclusion of Smith and Smith (1990) that the prospect of Britain's return to gold in 1925 had the effect of weakening sterling is subjected to critical analysis. It is shown that this conclusion is reversed when the trend in the UK money stock prior to joining the gold standard is treated as endogenous; and when non-stationary solutions are considered. It is further suggested that a more realistic interpretation of events must involve the use of a model with price inertia. The final section of the paper considers the major difference between the United Kingdom's return to gold and its entry into the EMS, namely, the current lack of credibility attached to an exchange rate peg for sterling.

The Early Modern Great Divergence: Wages, Prices and Economic Development in Europe and Asia, 1500-1800

Abstract: Contrary to the claims of Pomeranz, Parthasarathi and other ‘world historians’, the prosperous parts of Asia between 1500 and 1800 look similar to the stagnating southern, central and eastern parts of Europe rather than the developing northwestern parts. In the advanced parts of India and China, grain wages were comparable to those in northwestern Europe, but silver wages, which conferred purchasing power over tradable goods and services, were substantially lower. The high silver wages of northwestern Europe were not simply a monetary phenomenon, but reflected high productivity in the tradable sector. The ‘Great Divergence’ between Europe and Asia was already well underway before 1800.

Are we willing to give what it takes? Willingness to pay for climate change adaptation in developing countries

Abstract: Climate change adaptation is gaining traction as a necessary policy alongside mitigation, particularly for developing countries, many of which lack the resources to adapt. However, funding for developing country adaptation remains woefully inadequate. This paper identifies the burden of responsibility that individuals in the UK are willing to incur in support of adaptation projects in developing countries. Results from a nationally representative survey indicate that UK residents are willing to contribute £27 per year (or a median of £6 per year) towards developing country adaptation (US$30 and $7 using the World Bank's purchasing power conversion factors). This represents less than one-third of the back-of-the-envelope $100–$140 per capita per year that the authors estimate would be needed to raise the $70–$100 bn/yr recommended by the World Bank to fund developing country adaptation. Regressions indicate that willingness to pay is driven mostly by a combination of beliefs and perceptions about o...

Consumption as a social integration strategy in times of crisis: The case of vulnerable households

Abstract: In this article, we focus on consumption in a context of economic hardship. From an empirical perspective, and using a qualitative methodology, we show how disadvantaged individuals and households maintain a level of consumption commensurate with the society in which they are integrated through a type of consumption conceived of here as “resilient”. Resilient consumption is characterized by being a type of expenditure oriented towards maintaining the role of consumer, that is, maintaining a minimum level of purchasing power, modifying to this end both the level and the structure of consumption, both of which are key elements in the resilience process. We identify five main strategies used by households that modify and restructure the consumption of basic goods and necessities in response to economic hardship. Key resilient consumption strategies include: reduction (cutting down on spending), substitution (replacement of one difficulty with another), compensation (pseudo‐consumption or reduced usage), transference (meta‐resilience) and integration (reinterpretation of difficulties as opportunities). We conclude that although consumption is a naturally resilient behaviour, in a crisis context, resilient practices focus on maintaining acquisition capacity in spite of reduced income.

Wage Restraint, Employment, and the Legacy of the General Theory’s Chapter 19

Abstract: The role of wages in the determination of aggregate employment remains one of the most hotly debated public policy issues in many European countries, and in Germany in particular. This is not surprising in view of the high-profile collective bargaining process in which organized labor and emloyers negotiate over wages under conditions of persistent high unemployment. Of course, neither side wishes to be seen as merely pursuing its narrow self-interest. Both employers and unions make every effort to argue as convincingly as possible that their respective bargaining positions are conducive to employment growth and macroeconomic stability. Employers invoke neoclassical labor market theory to reject any demands for wage increases in excess of labor productivity growth. Such wage increases, they argue, mean rising labor costs and hence cause job losses. Unions, in contrast, emphasize demand-side repercussions and appeal to the Keynesian notion of the circular flow of income. They maintain that any attempt to boost employment through wage restraint is doomed to fail, mainly because this would reduce the purchasing power of consumers and thus domestic demand. Accordingly, they tend to put the blame for high unemployment on misguided fiscal and monetary policies. In contrast, the mainstream consensus regards the longer-term trends of output and employment as supply-determined and, therefore, rejects demand-side explanations of unemployment, except for the very short-run cyclical movements.