Purchasing power parity PPP is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.
Advances in understanding, theory and measurement must necessarily proceed hand in hand. A companion article in this publication sets forth the urgent need for new theory in economics.
This article sets forth the complementary need for new measures. The stakes are high and the choice is ours. The challenge is to derive more appropriate indicators to reflect real, sustainable economic welfare, social development and human wellbeing.
The attributes that have made GDP so successful are often overlooked — it provides clear objectives for policy and decision-making.
The index is applied to assess the economic performance of select countries from Tools and Measures Human beings are distinguished from other life forms by their unique ability to fashion tools which extend our powers of consciousness beyond the reach of our senses and our powers of execution beyond the limits of strength, endurance, space and time imposed by our physical bodies.
Tools are an instrument for social evolution.
Language is a tool which enables us to formulate original ideas, communicate our inmost thoughts and feelings, record events for posterity, transmit knowledge down through the ages, and exchange ideas over vast expanses of time and space. The efficiency of our tools is an index of our social development.
Measurement is another remarkable human ability. Modern medicine could not exist without the thermometer, stethoscope, sphygmomanometer and glucometer, along with measures for blood cell count, hemoglobin, cholesterol, and countless other metrics. Today every food ingredient is carefully measured for its exact nutritional content.
It is both a tool and a measure. But unlike other measures that are confined to measuring a single dimension or quality, money has the capacity of assigning value to almost anything material or immaterial — physical objects, human labor, social status, information, obedience, loyalty and sometimes even love.
Coinage enabled ancient kingdoms to become military and economic powers, because it facilitated standardized valuation of products and services for the financing and maintenance of huge armies.
The concept of zero was unknown to the Greeks and Romans. Developed independently in India and Mexico, it reached Europe via Arabia only in the 10th century.
One need only try adding and multiplying Roman numerals to realize how greatly the introduction of Hindu-Arabic numerals, the zero, and the decimal place enhanced the capacity for accounting and the growth of trade.
Combined with double-entry bookkeeping, they spurred the commercial revolution in 13th century Italy, facilitating the precise calculation of capital and profit. The Domesday Book is a record of the first known numerical census conducted by William I of England in to identify arable lands, livestock, fisheries and other sources of national wealth as a basis for improved tax collection.This paper investigates purchasing-power parity (PPP) since the late nineteenth century.
I collected data for a group of twenty countries over one hundred years, a larger historical panel of annual data than has ever been studied before.
The evidence for long-run PPP is favorable using recent multivariate and univariate tests of higher power. ALL FOUR questions are compulsory and MUST be attempted 1 HDW Co is a listed company which plans to meet increased demand for its products by buying new machinery costing $5 million.
The machinery would last for four years, at the end of which it would be replaced.
JUST WAR AND IRAQ: I said below that I have yet to hear a satisfactory answer on why a quick war with Iraq would not be more just than the status quo of immiserating sanctions. Now Glenn Reynolds links to a Michael Walzer essay on a war with Iraq that provides one response.
The key grafs: "Defending the embargo, the American overflights, and the UN inspections: this is the right way to oppose. Research and Publications. Our goal is to place people at the center of the development process in terms of research and analysis, economic debate, policy options and advocacy.
James Poterba, president James Poterba is President of the National Bureau of Economic Research. He is also the Mitsui Professor of Economics at M.I.T.
Purchasing power parity dates back several centuries but was actually introduced after World War 1. Before the war, gold standards were used but after the war it was difficult to continue this way because speculators were afraid countries would ask for high revenues after devaluing their currencies.