An economic theory (click here) that estimates the amount of adjustment needed on
the exchange rate between countries in order for the exchange to be
equivalent to each currency's purchasing power.
The relative version of PPP is calculated as:
Where:
"S" represents exchange rate of currency 1 to currency 2
"P1" represents the cost of good "x" in currency 1
"P2" represents the cost of good "x" in currency 2
No I am not going to conduct analysis on any of the TPP countries. There are currently tables that conduct that analysis. I will assume for the purpose of expediency the table is correct. Anyone can double check such facts by using real time data.
This is the table used for the comparison:
GDP per capita (click here) based on purchasing power parity (PPP). PPP GDP is gross domestic product converted to international dollars using purchasing power parity rates. An international dollar has the same purchasing power over GDP as the U.S. dollar has in the United States.
The concept of an international dollar:
The International dollar (also known as the Geary-Khamis dollar)(click here) is a currency unit used by economists and international organizations to compare the values of different currencies. International dollar comparisons between countries have been adjusted to reflect currency exchange rates, but also adjusted to reflect purchasing power parity (PPP) and average commodity prices within each country.
These standards are not so difficult the average person cannot understand them. There is no real magic here. It is simply a 'plug and chug' equation. They are not at all about Wall Street derivatives or swaps. Those exotic equations are exactly that and are not part of the understanding of what is occurring in the trade agreements. Actually, the trade agreements should prohibit those equations in the relationships between countries. I have no doubt Wall Street sees these trade agreements as a larger playground. Remember Wall Street doesn't have jobs. They earn wealth by manipulating the markets where average citizens hold jobs within the commodities and stocks traded. It can be somewhat interesting when one thinks of employment in relation to the health of the companies stock.
The relative version of PPP is calculated as:
Where:
"S" represents exchange rate of currency 1 to currency 2
"P1" represents the cost of good "x" in currency 1
"P2" represents the cost of good "x" in currency 2
No I am not going to conduct analysis on any of the TPP countries. There are currently tables that conduct that analysis. I will assume for the purpose of expediency the table is correct. Anyone can double check such facts by using real time data.
This is the table used for the comparison:
GDP per capita (click here) based on purchasing power parity (PPP). PPP GDP is gross domestic product converted to international dollars using purchasing power parity rates. An international dollar has the same purchasing power over GDP as the U.S. dollar has in the United States.
The concept of an international dollar:
The International dollar (also known as the Geary-Khamis dollar)(click here) is a currency unit used by economists and international organizations to compare the values of different currencies. International dollar comparisons between countries have been adjusted to reflect currency exchange rates, but also adjusted to reflect purchasing power parity (PPP) and average commodity prices within each country.
These standards are not so difficult the average person cannot understand them. There is no real magic here. It is simply a 'plug and chug' equation. They are not at all about Wall Street derivatives or swaps. Those exotic equations are exactly that and are not part of the understanding of what is occurring in the trade agreements. Actually, the trade agreements should prohibit those equations in the relationships between countries. I have no doubt Wall Street sees these trade agreements as a larger playground. Remember Wall Street doesn't have jobs. They earn wealth by manipulating the markets where average citizens hold jobs within the commodities and stocks traded. It can be somewhat interesting when one thinks of employment in relation to the health of the companies stock.
