I think there are inherent problems with developing a good purchasing power parity system. It therefore can be (tenuously) used as an indicator of those local factors. This is why the Big Mac as opposed to a basket of goods can be used as some indicator of PPP MacDonald's prices products according to other regional factors. McDonald's, as a franchise, tries to source all ingredients from the same places, thus the price of the Big Mac is affected minimally if at all by the cost of ingredients. 'the big mac index might be a good approximation, but it can be skewed one way or another because meat, or bread, or lettuce might be abnormally high in some area due to specific geographic conditions.' so does gdp with ppp take into account this price change or not? if not how might it be a good measure of gdp for (high inflationary) country. but somebody tell me inflation(price escalation) may also show the gdp with extraordinary amount. I got the idea of gdp(ppp) from this site. Can you please help me figure out the calculations? Many thanks, I have the nominal gdp data (quarterly) and also have the inflation rates. I am trying to calculate a PP adjusted GDP of few countries. 5 in India, could someone tell me what is PPP in this case? -JL For instance if a cup of coffee costs 1 dollar in the US and Rs. How is ppp calculated in india and abroad and how is it more beneficial in an economic sense? ankush p.
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