AN ANALYSIS OF THE EFFECT OF PURCHASING POWER PARITY ON NATIONAL COMPETITIVENESS AND HUMAN DEVELOPMENT IN 21 EUROPEAN COUNTRIES

Andreea-Daniela Gangone (), Mariana-Cristina Ganescu and Mihaela Asandei
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Andreea-Daniela Gangone: ”Constantin Brâncoveanu” University of Pitesti, Romania
Mariana-Cristina Ganescu: ”Constantin Brâncoveanu” University of Pitesti, Romania
Mihaela Asandei: ”Constantin Brâncoveanu” University of Pitesti, Romania

Contemporary Economy Journal, 2018, vol. 3, issue 1, 152-165

Abstract: The purchasing power parity is an indicator that facilitates the analysis of price differences between national economies, enabling comparisons in terms of level of development. In order to test this scientific hypothesis, we used the Big Mac Index to assess the purchasing power of the national currencies of 21 European countries between 2011 and 2017. We used statistical correlation to analyse the relationship between the strength of the national currency and the competitiveness of the national economy, on one hand, and the relationship between the strength of the national currency and the level of human development achieved by the countries included in the study, on the other hand. The two statistical correlations generated positive results, thus validating the initial hypothesis. All the correlation indices recorded positive values, ??higher than 0,5, throughout the entire period of analysis, supporting the idea that the strength of the national currency does influence the competitiveness and level of human development of the studied countries.

Keywords: Purchasing Power Parity; The Big Mac Index; The Global Competitiveness Index; The Human Development Index; European Union (search for similar items in EconPapers)
JEL-codes: E31 O15 O52 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:brc:brccej:v:3:y:2018:i:1:p:152-165

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