What Determines Purchasing Power Parity Exchange Rates?

2015 ◽  
Author(s):  
Alan Gelb ◽  
Anna Diofasi
Keyword(s):  
Exchange Rates ◽  
Purchasing Power Parity ◽  
Purchasing Power ◽  
Power Parity ◽  
Parity Exchange

scholarly journals Purchasing Power Parity Exchange Rates for the Global Poor

2011 ◽  
Vol 3 (2) ◽  
pp. 137-166 ◽  
Author(s):  
Angus Deaton ◽  
Olivier Dupriez
Keyword(s):  
Exchange Rates ◽  
Purchasing Power Parity ◽  
National Income ◽  
Poverty Line ◽  
Purchasing Power ◽  
Global Poverty ◽  
Power Parity ◽  
Aggregate Consumption ◽  
National Income Accounting ◽  
Parity Exchange

The global poverty count uses a common global poverty line, often referred to as the dollar-a-day line, currently $1.25 at 2005 international prices, whose construction and application depends on purchasing power parity (PPP) exchange rates for consumption. The price indexes that underlie the PPPs used for this purpose are constructed for purposes of national income accounting, using weights that represent patterns of aggregate consumption, not the consumption patterns of the global poor. We use household surveys from 62 developing countries to calculate global poverty-weighted PPPs and to calculate global poverty lines and new global poverty counts. (JEL C43, E21, F31, I32, O15)

Purchasing Power Parity and the Law of One Price: Evidence from Commodity Prices in Asian Countries

2015 ◽  
Vol 15 (2) ◽  
pp. 231-240 ◽  
Author(s):  
Mohsen Bahmani-Oskooee ◽  
ABM Nasir
Keyword(s):  
Exchange Rates ◽  
Purchasing Power Parity ◽  
Real Exchange Rates ◽  
Strong Support ◽  
Commodity Prices ◽  
Law Of One Price ◽  
Purchasing Power ◽  
Power Parity ◽  
Industrial Countries ◽  
The Law

Almost all previous studies that have tested the law of one price or Purchasing Power Parity theory (PPP) have used either real effective exchange rates or bilateral real exchange rates which are constructed using CPI or PPI data. Most of these studies have failed to support the PPP mostly due to aggregation bias. A few recent studies, have, therefore used commodity prices in different countries and have provided strong support for the theory. These studies have mostly used data from industrial countries. In this paper, we use individual prices of 52 retail items from 15 cities in Asia and test for stationarity of the real exchange rate and speed of adjustment. We provide support for PPP in 63% of the cases. We also find that using individual prices lead to faster convergence of real rates toward their PPP values.

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