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Working Paper
International relative price levels: a look under the hood
This paper examines the structure of international relative price levels using purchasing power parities (PPP) at the product-level from the 2005 World Bank?s International Comparison Program (ICP). Our examination is motivated by questions arising from two applications using economy-wide PPPs: the measurement of real effective exchange rates (REERs) and the correlation between prices and development. Specifically, how would our view on competitiveness be affected if one were to use PPP measures that exclude non-tradable categories? Is it the case that an increase in per-capita income raises ...