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.

Redistribution and Subsidies for Higher Education

Abstract: The financing of higher education through public spending imposes a transfer of resources from taxpayers (whether or not they are users of the educational services) to the university students ans their parents. Furthermore, most of these students come from middle and upper income groups, who are, therefore, the chief recipients of such transfers of purchasing power. We provide a simple explanation for this phenomenon. We already know that the individuals who attend higher education will earn a higher level of income in the future and, as such, will pay more taxes. People whose children do not attend higher education, howevershould agree to help pay the cost of such education, providing that the taxes are sufficiently high to ensure that there will be an adequate redistribution in favor of their own children at some time in the future.

A Nation's International Competitiveness in Different Stages of Economic Development

Abstract: INTRODUCTION Economic development means something more than just economic growth. It means quantitative growth (e.g., GNP) and qualitative change (e.g., improved techniques of production). We first develop a new framework for measuring economic development in terms of both quantitative growth and qualitative change. We then develop a new paradigm of identifying some predominant stages of economic development. In each stage, the sources of international competitiveness are discussed from three perspectives: physical factors, human factors, and the role of government. Data for the Asian countries are presented to show different groups of economic development. Adam Smith told us to leave the economy alone. The invisible hand would take care of it. People would sort things out, do what they can do best, and augment the wealth of nations. However, many countries still have low income and an absence of economic growth. These countries are called "underdeveloped," "less developed," "developing," or just "poor" countries. Modern development economics studies how the development of these countries can be achieved. While their policy recommendations vary, development economists in general agree that something should be done for economic growth and development. In other words, economic growth and development cannot be achieved just by the invisible hand. There are two important points here. One is to distinguish economic growth and economic development. Economic growth simply means quantitative growth in per capita GNP, whereas economic development means quantitative growth plus qualitative change. This qualitative change may include the rising share of industry and increasing percentage of urbanization [Gillis et al 1992]; increased self-esteem [Kasliwal 1995]; and the protection of life opportunities [United Nations Development Programme 1994]. However, one problem with these views is that they are not direct measures for economic development. More direct economic variables such as improved techniques of production are needed to measure economic development. The other important point is to distinguish different stages and patterns of economic development. The use of terms such as "third world," "poor countries," or "developing countries" tends to obscure the diversity of these countries. They need to be further categorized into different levels of development. It should also be noted that countries follow different patterns of economic development. For example, some countries emphasize quantitative growth, while other countries (e.g., communist countries) try to achieve qualitative development rather than just GNP growth. However, most of the existing stage theories [e.g., Smith 1937; Marx 1962; Rostow 1971; Porter 1990] are not satisfactory in explaining the different paths of economic development because they focus primarily on unidirectional views of development. A new model should employ more than one explanatory variable to explain the variety of development paths. This paper is divided into three sections. The first section discusses two dimensions of economic development and develops a new framework for measuring economic development. Based on this framework, a new model for development stages is also introduced. The subsequent section then explains the sources of a nation's international competitiveness in each stage of economic development. The final section provides a summary and conclusions. PATTERNS OF ECONOMIC DEVELOPMENT Two Dimensions of Economic Development Because GNP alone is not a good measure for economic development, some alternative methods have been developed. Two of the most popular methods are Purchasing Power Parities (PPP) and Physical Quality of Life Index (PQLI). The PPP attempts to adjust international comparisons for the real purchasing power parities of national currencies. The PQLI is a composite index of infant mortality, life expectancy, and basic literacy. …

Hyperinflation in Zimbabwe

Abstract: One hundred trillion dollars?that?s100,000,000,000,000?is the largest denomination of currency ever issued.1 The Zimbabwean government issued the Z$100 trillion bill in early 2009, among the last in a series of ever higher denominations distributed as inflation eroded purchasing power. When Zimbabwe attained independence in 1980, Z$2, Z$5, Z$10 and Z$20 denominations circulated, replaced three decades later by bills in the thousands and ultimately in the millions and trillions as the government sought to prop up a weakening economy amid spiraling inflation.

Can America Stay on Top

Abstract: The United States has long enjoyed a unique position of economic supremacy. Not only is it far and away the most populous of the advanced market economies; for most of the past century it has also had substantially higher per capita income than any other major nation. As a result, the only puzzle about the Pax Americana that took shape in the 1940s is that it took so long in coming: at the time the United States actually took on the mantle of world leadership, it had about as much purchasing power as all other market economies combined. By the early 1990s, however, almost everyone believed that the age of U.S. supremacy was nearing its end. U.S. GDP per capita was no longer exceptional when measured at current exchange rates, although when measured at purchasing power parity instead the United States still led its rivals in real output per head. Perhaps more significant, other advanced countries had clearly overtaken U.S. productivity in some industries, and surpassed the United States in some technologies. The rapid growth of Asian developing countries further suggested that the balance of world economic power might be shifting away from the original advanced nations; probably nobody now alive will see China come anywhere close to U.S. income per capita, but all it has to do is reach one-fifth of the U.S. level to become the world’s largest economy in absolute terms. While prophets of “declinism” like Kennedy (1989) and Thurow (1992) did not entirely dominate the discourse—Nye (1992), for example, argued that despite its gradual relative economic decline the United States retained the resources to remain the world’s political leader for decades to come— circa 1992 few people would have dared to suggest that a second “American century” might be in prospect. At the millennium, however, such suggestions are indeed being made (for

Purchasing Power Parities in Five East African Countries: Burundi, Kenya, Rwanda, Tanzania, and Uganda

Abstract: In a case study of Burundi, Kenya, Rwanda, Tanzania, and Uganda, this paper finds that bilateral real exchange rates revert to a long-term equilibrium in line with purchasing power parities, implying that these countries constitute an integrated trading zone, their markets are interdependent and arbitrage works efficiently, and intraregional competitiveness is preserved. These findings are partly explained by the flexibility of nominal exchange rates and prices and the absence of long-term productivity differences among these countries. To strengthen market integration, foster private sector development, and enhance growth prospects, the paper emphasizes the importance of increased trade, competitive labor markets, flexible exchange rates, and convergence of macroeconomic and structural policies.