Purchasing power parity within the United States
Economics has many articles of faith. One of the most dearly held is Purchasing Power Parity, which posits that the price of the same good in different regions should be equivalent when no barriers to arbitrage exist. Because Purchasing Power Parity (PPP) is an important assumption in much of international economic theory, this article examines empirical evidence testing this proposition. ; Instead of analyzing international data, this study analyzes PPP between regions of the United States. By comparing regions within a country, it eliminates many of the hypotheses offered to explain the ...
Consumption trends suggest middle class continuing to get ahead.
Is purchasing power parity a useful guide to the dollar?
For here or to go? Purchasing power parity and the Big Mac
Purchasing power parity and uncovered interest rate parity: the United States 1974-1990
This paper examines the factors behind long-run movements of the dollar. Most recent work has concluded that structural exchange rate models explain only a small proportion of exchange rate movements. However, many economists still find the theory that links exchange rates and interest rates persuasive. We investigate the relationship between exchange rates, prices, and interest rates using multivariate maximum likelihood cointegration tests. In particular, we explicitly test for purchasing power parity and uncovered interest rate parity when using nominal exchange rates, and implicitly test ...
Jargon alert: Inferior goods
Related link(s): https://www.richmondfed.org/-/media/richmondfedorg/publications/research/econ_focus/2009/summer/jargon_alert_weblinks.cfm
Income: up or down?
Real wages in the 1980s