IDEAS home Printed from https://ideas.repec.org/a/oec/packaa/5l9hqt8p0ps8.html
   My bibliography  Save this article

A Contribution to the "Purchasing Power Parity vs. Market Exchange Rates for Use in Long-Term Scenarios" Discussion

Author

Listed:
  • OECD

Abstract

Market Exchange Rates (MER) balance the demand and supply for international currencies, while Purchasing Power Parity (PPP) exchange rates capture the differences between the cost of a given bundle of goods and services in different countries. When undertaking multi-country analysis of environmental issues (such as climate change) that includes different currencies, a decision has to be made as to whether to use PPP or MER in the analytical framework. The distinction between them is particularly germane in inter-temporal studies that postulate future scenarios. PPPs are generally favoured for their closer link to welfare, but MERS are necessarily the basis of international trade, so it is difficult to choose between them. Some authors have noted some empirical regularity between them and have sought to exploit this to avoid choosing between PPP and MER. In this paper, it is shown that such ad hoc adjustments are not necessary when structural changes are accounted for.

Suggested Citation

  • Oecd, 2006. "A Contribution to the "Purchasing Power Parity vs. Market Exchange Rates for Use in Long-Term Scenarios" Discussion," OECD Papers, OECD Publishing, vol. 6(2), pages 1-19.
    • Handle: RePEc:oec:packaa:5l9hqt8p0ps8
    DOI: 10.1787/oecd_papers-v6-art9-en
    as

    Download full text from publisher

    File URL: https://doi.org/10.1787/oecd_papers-v6-art9-en
    Download Restriction: Full text available to READ online. PDF download available to OECD iLibrary subscribers.
    File URL: https://libkey.io/10.1787/oecd_papers-v6-art9-en?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oec:packaa:5l9hqt8p0ps8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/oecddfr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.