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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 the case of two countries with different currencies, one can speak of a "commodity PPP" as being the rate of exchange between the two currencies which would equalize the price of a given commodity; then the general PPP for the two countries is some average of commodity PPPs as discussed by the authors.
Abstract: THIS ARTICLE'S MAIN PURPOSE iS to discuss certain key problems that arise in calculating purchasing-power parities (PPPs) when making international comparisons of real product, while reviewing partially the work of Irving Kravis, Alan Heston and Robert Summers (1982). Before beginning the discussion, the author wishes to record his opinion that this work of Kravis, Heston and Summers, carried out and successively published over the past 15 years, represents one of the great contributions to applied economics. In the article that precedes this one, Kravis provides a survey of the applications of this type of data, but it must be emphasized that any such listing can do only partial justice to the scope of new applications which seem to arise almost every day. Apart from applications to various aspects of international economic policy, there is so much greater international variation in basic economic variables, such as real income and relative prices, than is usually found in typical intranational/intertemporal comparisons, that the new data inevitably represent an enormous increment in our science's general capacity for statistical experiment. Thus, the debt owed to this team of research workers, by the economics profession at large, is immeasurable. A PPP is essentially a form of international or interregional price index, complicated, but not essentially changed, by the existence of national currencies. For example, suppose we found, by some kind of index-number calculation, that the general price level in region A was 10 percent higher than in region B of the same country. Given a common currency, the "exchange rate" between the money circulating in the two regions is clearly 1.0, but the PPP for region A, in comparison with region B, is 0.91, this being the number by which it is necessary to multiply a given nominal income in A to give it the same purchasing power as a corresponding income in B. It follows that the PPP must be some average of the ratios among individual commodity prices in the two regions. In the case of two countries with different currencies, one can speak of a "commodity PPP" as being the rate of exchange between the two currencies which would equalize the price of a given commodity; then the general PPP for the two countries is some average of the commodity PPPs. In international, as in intertemporal, comparisons, there is a duality between the problem of measuring price levels and

41 citations

Posted Content
TL;DR: In this paper, the authors present a survey of monetary reform proposals that the title brings to mind rather than devote the paper to a single one of them, and examine how they might work and how they may promote progress in monetary theory.
Abstract: The assigned title of this paper suggests that my task is to survey proposals that the title brings to mind rather than devote the paper to a single one of them. Even if none of the proposed reforms ever is adopted, examining how they might work may promote progress in monetary theory. Some properties ofactual monetary systems are illuminated by contrasting them with imaginary systems. Our Preposterous Dollar On reflection, our existing monetary system must seem preposterous. It is not difficult to understand how individually plausible steps over years and centuries have brought us to where we now are, but the cumulative result remains preposterous nevertheless. Our unit of account—our pervasively used measure of value, analogous to units of weight and length—is whatever value supply and demand fleetingly accord to the dollar of fiat money. If balance between demand for and supply ofthis fiat medium of exchange is not maintained by clever manipulation of its nominal quantity at a stable equilibrium value of the money unit, then any correction ofthis supply-and-demand imbalance must occur through growth or shrinkage of the unit itself Money’s purchasing power— the general price level—must change. This change does not occur swiftly and smoothly. Money’s value must change, when it does, through a long-drawn-out, roundabout process involving millions of separately determined, though interdependent, prices and wage rates. Meanwhile, until the monetary disequilibrium has been finally cor

41 citations

Journal ArticleDOI
TL;DR: Evidence is found of coherent world drug markets driven by both local realities and international relations, suggesting that relations in legal and illegal markets are directed in opposite directions.

41 citations

Journal ArticleDOI
TL;DR: The results suggest that assets are an important determinant of effective affordability, undermining the notion that many people are uninsured by choice.
Abstract: There have been debates over how many uninsured people can afford insurance but refuse to purchase it. Examining the difference in asset holdings between the privately insured and the uninsured, we found that the difference in purchasing power is not fully revealed by income comparisons. Median income among the privately insured is 2.9 times that of the uninsured, but median wealth among those with private insurance is 23.2 times that of the uninsured. Our results suggest that assets are an important determinant of effective affordability, undermining the notion that many people are uninsured by choice.

41 citations

Journal ArticleDOI
TL;DR: In this paper, the authors describe how to overcome low customer purchasing power and lack of adequate infrastructure are two difficulties that restrict opportunities in any emerging market, and propose a unified framework to unearthing opportunities at the bottom of the pyramid and coping with institutional voids.
Abstract: Purpose – Low customer purchasing power and lack of adequate infrastructure are two difficulties that restrict opportunities in any emerging market. This paper seeks to describe how to overcome these hurdles.Design/methodology/approach – The paper blends two different perspectives on emerging markets: unearthing opportunities at the bottom of the pyramid, and coping with institutional voids, to offer a unified framework and illustrate it with examples.Findings – In order to fully leverage the opportunities afforded by emerging markets, companies need both product and business‐system innovations. The former is needed to serve customers at price points that they can afford and the latter to reach them in the market and to offer them additional services that have the potential to justify a price premium or at the very least will build brand loyalty.Research limitations/implications – The proposed strategy has its own risks. But there are potential payoffs as well. Further research is needed to assess these t...

40 citations


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Performance
Metrics
No. of papers in the topic in previous years
YearPapers
2023158
2022393
202190
2020113
2019103
2018110