Purchasing Power Parity (PPP) Part 1 - Converting to International Data
Автор: Econbusters
Загружено: 2023-06-16
Просмотров: 1732
Purchasing power parity exchange rates represent what the exchange rate (between two currencies) would have to be for purchasing power to be equal. A synonym for purchasing power parity is buying power equivalence. In other words, the PPP exchange rate is what the exchange rate would need to be for buying power to be equal when currencies are exchanged. When we convert international data (data in foreign currencies) to USD (as it usually is) the PPP exchange rate (as a conversion rate) provides for a clearer viewer into the standard of living of a country.
There is a Part 2 video. This video focuses on using the PPP as a theory of exchange rate determination. In other words, the PPP rate is seen as having predictive power on where the nominal exchange rate is headed.
This video is made for 1st year college students or AP/IB Economics students. It focuses on foundational economic concepts.
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