What do you mean I didn't answer your question about PPP?
I told you that the data can be easily manipulated because it includes such intangibles as subsidized consumer goods, or goods under price controls, and/or goods/services where the costs are hidden because they are provided by the government (like health care). But then again, supposedly OECD is supposed to properly incorporate such subsidized governmental services. However, the methodology for assessing value on these hidden cost/benefits are unreliable and incomplete.
oecd.org
oecd.org
worldbank.org
And is this what you're referring to about PPP vs GDP?
worldbank.org
It shows the US with a ranking of #4 and Luxembourg as #1 with regard to PPP.
But I do have to say that I did discover an interesting link that outlines a valuation comparison of various currencies versus the US dollar using PPP data.
pacific.commerce.ubc.ca
Personally, I prefer the "BigMac" index for determining the proper PPP.
economist.com
economist.com
But all of this doesn't matter, now does it? What matters is where people are risking their money with regard to investment capital. And it sure ain't S. Africa, Malaysia, or most other places that may have a better PPP than the US. (probably because deflation has them its grasp).
And the WHOLE concept of using PPP instead of exchange rates is still based upon sketchy data, and doesn't yet incorporate the INTERNAL purchasing power of a currency with it's own borders.
Furthermore, advocates are not proposing to use the PPP as a "measure of purchasing power of different currencies, but the purchasing power of money, on average, in different countries" (Pg 14, para 4.10, oecd.org
So by their very admission, they are not trying, nor do they assert that PPP statistics represent an accurate reflection of economic health. Furthermore, they fully admit that without additional resources the reliability of the data is, at best, questionable (Pg 19, para 6.1-4)
So while I think they actually might be on to something with the PPP (given that I've spent the past two hours boning up on the topic as best I can), there is still nothing better than comparing exchange rates in determining appropriate monetary policy and analyzing where to seek the best return on your investment dollar.
Now why don't you answer some of MY QUESTIONS? Or are you just another Canadian who takes every opportunity to disparage Americans (since your profile says you're from/in Canada) because your cost average cost of living is higher than ours, you pay higher taxes so all of your talent moves south, and you use colorful funny money? (sorry Hutch.... :0)
If you're going to use a single indicator as your end all, be all, it would be nice of you to at least acknowledge that it's an economic statistic that remains a "work in progress"
Regards,
Ron |
