Lecture Notes 5 Purchasing Power Parity
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The Decline of Neoliberalism: a Play in Three Acts* O Declínio Do Neoliberalismo: Uma Peça Em Três Atos
Brazilian Journal of Political Economy, vol. 40, nº 4, pp. 587-603, October-December/2020 The decline of neoliberalism: a play in three acts* O declínio do neoliberalismo: uma peça em três atos FERNANDO RUGITSKY**,*** RESUMO: O objetivo deste artigo é examinar as consequências políticas e econômicas da pandemia causada pelo novo coronavírus, colocando-a no contexto de um interregno gram sciano. Primeiro, o desmonte da articulação triangular do mercado mundial que ca- racterizou a década anterior a 2008 é examinado. Segundo, a onda global de protestos e os deslocamentos eleitorais observados desde 2010 são interpretados como evidências de uma crise da hegemonia neoliberal. Juntas, as crises econômica e hegemônica representam o interregno. Por fim, argumenta-se que o combate à pandemia pode levar à superação do neoliberalismo. PALAVRAS-CHAVE: Crise econômica; hegemonia neoliberal; interregno; pandemia. ABSTRACT: This paper aims to examine the political and economic consequences of the pandemic caused by the new coronavirus, setting it in the context of a Gramscian interregnum. First, the dismantling of the triangular articulation of the world market that characterized the decade before 2008 is examined. Second, the global protest wave and the electoral shifts observed since 2010 are interpreted as evidence of a crisis of neoliberal hegemony. Together, the economic and hegemonic crises represent the interregnum. Last, it is argued that the fight against the pandemic may lead to the overcoming of neoliberalism. KEYWORDS: Economic crisis; neoliberal hegemony; interregnum; pandemic. JEL Classification: B51; E02; O57. * A previous version of this paper was published, in Portuguese, in the 1st edition (2nd series) of Revista Rosa. -
The Consumer Price Index and Index Number Purpose W
1 THE CONSUMER PRICE INDEX AND INDEX NUMBER PURPOSE W. Erwin Diewert, Department of Economics, University of British Columbia, Vancouver, B. C., Canada, V6T 1Z1. Email: [email protected] Paper presented at the Fifth Meeting of the International Working Group on Price Indices (The Ottawa Group), Reykjavik, Iceland, August 25-27, 1999; Revised: September, 1999. 1. INTRODUCTION1 “What index numbers are ‘best’? Naturally much depends on the purpose in view.” Irving Fisher (1921; 533). A Consumer Price Index (CPI) is used for a multiplicity of purposes. Some of the more important uses are: · as a compensation index; i.e., as an escalator for payments of various kinds; · as a Cost of Living Index (COLI); i.e., as a measure of the relative cost of achieving the same standard of living (or utility level in the terminology of economics) when a consumer (or group of consumers) faces two different sets of prices; · as a consumption deflator; i.e., it is the price change component of the decomposition of a ratio of consumption expenditures pertaining to two periods into price and quantity change components; · as a measure of general inflation. The CPI’s constructed to serve purposes (ii) and (iii) above are generally based on the economic approach to index number theory. Examples of CPI’s constructed to serve purpose (iv) above are the harmonized indexes produced for the member states of the European Union and the new harmonized index of consumer prices for the euro area, which pertains to the 11 members of the European Union that will use a common currency (called Euroland in the popular press). -
WT/GC/W/757 16 January 2019 (19-0259) Page
WT/GC/W/757 16 January 2019 (19-0259) Page: 1/45 General Council Original: English AN UNDIFFERENTIATED WTO: SELF-DECLARED DEVELOPMENT STATUS RISKS INSTITUTIONAL IRRELEVANCE COMMUNICATION FROM THE UNITED STATES The following communication, dated 15 January 2019, is being circulated at the request of the delegation of the United States. _______________ 1 INTRODUCTION 1.1. In the preamble to the Marrakesh Agreement Establishing the World Trade Organization, the Parties recognized that "their relations in the field of trade and economic endeavor should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world's resources in accordance with the objective of sustainable development…." 1.2. Since the WTO's inception in 1995, Members have made significant strides in pursuing these aims. Global Gross National Income (GNI) per capita on a purchasing-power-parity (PPP) basis, adjusted for inflation, surged by nearly two-thirds, from $9,116 in 1995 to $15,072 in 2016.1 The United Nations Development Program's (UNDP) Human Development Index (HDI) for the world increased from 0.598 to 0.728 between 1990 and 2017.2 According to the World Bank, between 1993 and 2015 — the most recent year for which comprehensive data on global poverty is available — the percentage of people around the world who live in extreme poverty fell from 33.5 percent to 10 percent, the lowest poverty rate in recorded history.3 Despite the world population increasing by more than two billion people between 1990 and 2015, the number of people living in extreme poverty fell by more than 1.1 billion during the same period, to about 736 million.4 1.3. -
Burgernomics: a Big Mac Guide to Purchasing Power Parity
Burgernomics: A Big Mac™ Guide to Purchasing Power Parity Michael R. Pakko and Patricia S. Pollard ne of the foundations of international The attractive feature of the Big Mac as an indi- economics is the theory of purchasing cator of PPP is its uniform composition. With few power parity (PPP), which states that price exceptions, the component ingredients of the Big O Mac are the same everywhere around the globe. levels in any two countries should be identical after converting prices into a common currency. As a (See the boxed insert, “Two All Chicken Patties?”) theoretical proposition, PPP has long served as the For that reason, the Big Mac serves as a convenient basis for theories of international price determina- market basket of goods through which the purchas- tion and the conditions under which international ing power of different currencies can be compared. markets adjust to attain long-term equilibrium. As As with broader measures, however, the Big Mac an empirical matter, however, PPP has been a more standard often fails to meet the demanding tests of elusive concept. PPP. In this article, we review the fundamental theory Applications and empirical tests of PPP often of PPP and describe some of the reasons why it refer to a broad “market basket” of goods that is might not be expected to hold as a practical matter. intended to be representative of consumer spending Throughout, we use the Big Mac data as an illustra- patterns. For example, a data set known as the Penn tive example. In the process, we also demonstrate World Tables (PWT) constructs measures of PPP for the value of the Big Mac sandwich as a palatable countries around the world using benchmark sur- measure of PPP. -
STATISTICS BRIEF Purchasing Power Parities – Measurement and Uses
STATISTICS Purchasing power BRIEF parities – measurement 2002 March No. 3 and uses by Paul Schreyer and Francette Koechlin How does one compare economic data between countries that is expressed in units of national currency? And in particular, how should measures of production and Gross Domestic Product (GDP) be converted into a common unit? One answer to this ques- tion is to use market exchange rates. While straightforward, this turns out to be an unsatisfactory solution for many purposes – primarily because exchange rates reflect so many more influences than the direct price comparisons that are required to make In this issue volume comparisons. Purchasing Power Parities (PPPs) provide such a price compari- son and this is the rationale for the work of the OECD and other international organisa- 1 What are PPPs? tions in this field (see chart 1). The OECD publishes new sets of benchmark PPPs every three years, drawing on detailed international price comparisons. Every time a new set of 2 Who uses them? benchmark PPPs is released, this also gives rise to a new set of international compari- 3 How to measure sons of levels of GDP and economic welfare. economic welfare, ... 3 ... the size of economies, ... What are PPPs? 4 ... productivity ? In their simplest form, PPPs are price relatives, which show the ratio of the prices in 5 Comparing price levels national currencies of the same good or service in different countries. A well-known 5 Inter-temporal compari- example of a one-product comparison is The Economist’s BigMacCurrency index, sons: using current presented by the journal as ”burgernomics”, whereby the BigMac PPP is the conversion or constant PPPs rate that would mean hamburgers cost the same in America as abroad. -
Math Calculations to Better Utilize CPI Data
Math calculations to better utilize CPI data Report prepared by Gerald Perrins, branch chief of Consumer Prices in the Mid-Atlantic region, and Diane Nilsen, former regional clearance officer in the National Office of Field Operations, Bureau of Labor Statistics. The Consumer Price Index (CPI) is published points, because index point changes are as an index number that shows the change in affected by the level of the index in relation to the price of a defined market basket of goods its base period, while percent changes are not. and services over time from a base period which is defined as 100.0. An increase of 7 The following illustration shows a percent from that base period, for example, is hypothetical CPI one-month change between shown as 107.0. Alternately, that relationship April 2016 and May 2016 using the 1982- can also be expressed as the price of a base 84=100 reference base. period "market basket" of goods and services rising from $100 to $107. Currently, the Reference Base reference base for most CPI indexes is 1982- 1982-84=100 84=100 but some indexes have other May 2016 ........................................ 240.236 references bases. The reference base years April 2016 ....................................... 239.261 refer to the period in which the index is set to Index point change .............................. 0.975 100.0. In addition, expenditure weights are Divided by the earlier index ..... 0.975/239.261 updated every two years to keep the CPI Equals ............................................... 0.004075 current with changing consumer preferences. Multiplied by 100 ............................... 0.4075 Equals percent change ........................ 0.4 Index numbers are not dollar values, but measures of the change over time relative to Over-the-year percent change their base period value of 100.0 (for example, To arrive at a percent change over an entire 280.0 or 30.3). -
AP Macroeconomics: Vocabulary 1. Aggregate Spending (GDP)
AP Macroeconomics: Vocabulary 1. Aggregate Spending (GDP): The sum of all spending from four sectors of the economy. GDP = C+I+G+Xn 2. Aggregate Income (AI) :The sum of all income earned by suppliers of resources in the economy. AI=GDP 3. Nominal GDP: the value of current production at the current prices 4. Real GDP: the value of current production, but using prices from a fixed point in time 5. Base year: the year that serves as a reference point for constructing a price index and comparing real values over time. 6. Price index: a measure of the average level of prices in a market basket for a given year, when compared to the prices in a reference (or base) year. 7. Market Basket: a collection of goods and services used to represent what is consumed in the economy 8. GDP price deflator: the price index that measures the average price level of the goods and services that make up GDP. 9. Real rate of interest: the percentage increase in purchasing power that a borrower pays a lender. 10. Expected (anticipated) inflation: the inflation expected in a future time period. This expected inflation is added to the real interest rate to compensate for lost purchasing power. 11. Nominal rate of interest: the percentage increase in money that the borrower pays the lender and is equal to the real rate plus the expected inflation. 12. Business cycle: the periodic rise and fall (in four phases) of economic activity 13. Expansion: a period where real GDP is growing. 14. Peak: the top of a business cycle where an expansion has ended. -
Using Price Indexes
INFORMATION BRIEF Research Department Minnesota House of Representatives 600 State Office Building St. Paul, MN 55155 Pat Dalton, Legislative Analyst, 651-296-7434 Kathy Novak, Legislative Analyst, 651-296-9253 Updated: November 2009 Using Price Indexes This information brief is a nontechnical guide to the use of price indexes. It explains the difference among the three most commonly used price indexes and suggests when each index should be used. Additionally, this information brief shows how to make some common calculations using price indexes. Contents Price Indexes and Their Uses ...........................................................................................................2 Descriptions of the Major Price Indexes ..........................................................................................2 Gross Domestic Product Chain-Weighted Price Index ..............................................................2 Consumer Price Index (CPI) ......................................................................................................4 Producer Price Index (PPI) ........................................................................................................5 Glossary of Price Index Terms ........................................................................................................7 Common Calculations Using Price Indexes ....................................................................................8 Summary of Major Price Indexes ..................................................................................................10 -
The Market Basket Powerpoint Lesson Plan
FEDERAL RESERVE BANK OF ST. LOUIS ECONOMIC EDUCATION The Market Basket PowerPoint Lesson Plan Lesson Author Jeannette Bennett, Federal Reserve Bank of St. Louis —Memphis Branch Standards and Benchmarks (see page 12) Lesson Description In this lesson, students will compare the price of goods from one time period to another and through discussion and role play interpret the effects of inflation on con - sumers. They will categorize goods and services according to the eight major groups of the consumer price index (CPI) and be able to determine the difference between the CPI and the core CPI. Grade Level 9-12 Time Required 60-90 minutes Concepts Bureau of Labor Statistics (BLS) Consumer price index (CPI) Core CPI Goods Inflation Inflation rate Purchasing power Services ©2013, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes, provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education_resources. 1 PowerPoint Lesson Plan The Market Basket Objectives Students will • define inflation, inflation rate, consumer price index (CPI), and core CPI; • explain how inflation affects purchasing power; • determine the price of goods and services from one year to another as adjusted for inflation by using an online calculator; • identify the categories of consumer spending included in the CPI and the core CPI; and • explain a role of the Bureau of Labor Statistics. Materials • PowerPoint presentation “The Market Basket” • Handout 1, one copy cut apart, making eight strips • Handout 2, one copy for each student • Handout 3, one copy for each student • One first-class postage stamp to use as a visual • Internet access Procedure 1. -
Presentation
Main messages • Trade and the WTO have contributed to the development successes of the past decade and a half. • But there are still big development challenges ahead and both trade and the WTO have big contributions to make. Four key trends • Rise of developing countries • Increased developing country participation in global value chains • Higher commodity prices • Increased synchronization of macroeconomic shocks Rise of developing countries Broad-based convergence • In the last decades, Figure B.8: Average annual growth in per capita GDP at purchasing-power-parity by level of development, 1990-2011 faster GDP growth (annual percentage change) in developing 7.0 countries has 6.6 6.0 allowed 5.4 5.0 4.7 convergence with 3.9 4.0 3.8 3.7 developed 2.9 3.0 2.4 countries. 1.8 1.9 2.0 1.5 1.2 0.9 0.9 1.0 • Growth has been 0.0 broadly spread: -1.0 -0.7 - G-20 developing -1.3 -2.0 countries have shown World Developed Developing G-20 Other Least LDC oil LDC economies economies developing developing developed exporters agricultural double-digit growth economies economies countries products - Natural resource (LDCs) exporters exporters have 1990-2000 2000-2011 benefited from higher commodity prices. Role of trade • GDP growth has moved hand in hand with integration in the world economy. • Although this relationship does not show causation, we know trade increases growth through various channels. Poverty • There has been a dramatic reduction in poverty. • Many countries have surpassed their MDG goals. Figure B.12: Share of population living in households below extreme poverty line, selected countries, 2000-11 • But the share of (per-cent) population in 70 extreme poverty has increased in a 60 few countries. -
Index Numbers and Their Relationship with the Economy
No. 1 No. ECLAC Methodologies Index numbers and their relationship with the economy Federico Dorin Daniel Perrotti Patricia Goldszier Index numbers and their relationship with the economy and their relationship numbers Index Thank you for your interest in this ECLAC publication ECLAC Publications Please register if you would like to receive information on our editorial products and activities. When you register, you may specify your particular areas of interest and you will gain access to our products in other formats. www.cepal.org/en/publications ublicaciones www.cepal.org/apps Alicia Bárcena Executive Secretary Mario Cimoli Deputy Executive Secretary Raúl García-Buchaca Deputy Executive Secretary for Management and Programme Analysis Rolando Ocampo Chief, Statistics Division Ricardo Pérez Chief, Publications and Web Services Division This publication was prepared by Federico Dorin, Daniel Perrotti and Patricia Goldszier under the auspices of the Statistics Division of the Economic Commission for Latin America and the Caribbean (ECLAC) and the ECLAC office in Washington, D.C. The authors are grateful to Salvador Marconi and Mara Riestra for their detailed reading of the document and valuable comments, and to Pascual Gerstenfeld, Inés Bustillo and Giovanni Savio for their support for its preparation. The views expressed in this document are those of the authors and do not necessarily reflect the views of the Organization. United Nations publication ISBN: 978-92-1-122038-4 (print) ISBN: 978-92-1-004737-1 (pdf) ISBN: 978-92-1-358272-5 (ePub) Sales No.: E.18.II.G.13 LC/PUB.2018/12-P Distribution: G Copyright © United Nations, 2020 All rights reserved Printed at United Nations, Santiago S.19-01059 This publication should be cited as: F. -
Integration of CPI and PPP: Methodological Issues, Feasibility and Recommendations
Organisation de Coopération et de Développement Economiques Organisation for Economic Co-operation and Development Integration of CPI and PPP: Methodological Issues, Feasibility and Recommendations University of New England, Australia Agenda item n° 4 JOINT WORLD BANK – OECD SEMINAR ON PURCHASING POWER PARITIES Recent Advances in Methods and Applications WASHINGTON D.C. 30 January – 2 February 2001 INTEGRATION OF CPI AND PPP: METHODOLOGICAL ISSUES, FEASIBILITY AND RECOMMENDATIONS D.S. Prasada Rao School of Economics University of New England Australia Paper for presentation at the World Bank-OECD Seminar on Purchasing Power Parities: Recent Advances in Methods and Applications, 30 January-2 February, 2001, Washington,DC. This paper is based on a revision of a background paper prepared for the DECDG of the World Bank. The paper is written for inclusion as an appendix in the CPI Manual currently under preparation by the Inter-secretariat Working Group on Price Statistics. The author acknowledges comments from John Astin, Bert Balk, Yonas Biru, Yuri Dhikanov, Jong-goo, Alan Heston, Bill Shepherd, Ralph Turvey, the Statistics Directorate of the OECD and the PPP Section of the National Accounts Section at the OECD. The current version represents a major revision of the original paper since its form and content are significantly influenced by the comments received. The author, of course, remains responsible for any remaining errors. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author. They do not necessarily represent the views of the World Bank, its executive Directors, or the countries they represent. 1. Introduction 1. Consumer price index (CPI) and purchasing power parity (PPP) conversion factors share conceptual similarities.