Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Sure. PPP is a way to measure how much produce you get for a certain currency in the county. It's measured by setting up a "basket" of products (usually not including very many Plasma TVs) and seeing how much they cost in the different countries.

PPP Exchange rate is the theoretical exchange rate you should have if each currency would give you the same amount of money.

I think JakeSs main misunderstanding comes here:

First, for most of the goods involved in subsistence, there is no global market, hence the assumption of equal prices is simply (and patently) false.

Sure. But that doesn't matter, since the point here is not saying what the exchange rates between two currencies should be, but the point is to convert the daily income into something that is comparable. And for that, PPP works just fine.

This is of course not perfect, but it's way better than just using currency exchange rates when measuring poverty.

by freedomfighter on Thu Oct 25th, 2007 at 09:15:42 AM EST
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