USE OF PURCHASING POWER PARITY IN INTERNATIONAL COMPARISONS

Radu Titus Marinescu, Aurelian Diaconu, Zoica Nicola and Doina Avram
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Radu Titus Marinescu: „Artifex”University of Bucharest
Aurelian Diaconu: „Artifex”University of Bucharest
Zoica Nicola: „Artifex”University of Bucharest
Doina Avram: Bucharest University of Economic Studies

Romanian Statistical Review Supplement, 2017, vol. 65, issue 7, 114-122

Abstract: The authors seek to clarify in this article the main issues that are being considered in connection with the achievement of international comparisons. Of course, output indicators (gross domestic product, gross national product, per capita product, national income, personal income, available income) are indicators that integrate into international data series, provide a number of criteria and considerations to be taken into consideration . However, comparing macroeconomic indicators is not just a theoretical question, but more than just a practical issue when it comes to comparisons between states. There have been and there are a number of concepts and opinions about using the indicator in physical expression, comparing production, comparing consumption per capita or countries with quality or other quality products, and more. However, the comparison can only be made using macroeconomic indicators of results calculated within the National Accounts System. In this article, the authors question the use of the purchasing power parity of incomes available to a population in a given country over a given period of time. Wages and, broadly speaking, the income of a country’s population depend on a whole range of factors: the country’s economic potential, national wealth, the level of production development, the level of technology, the free market, the inflation rate And many other factors. It is therefore not relevant and advisable to compare salary levels in a number of other countries, even if they are denominated in the same currency. There is no difference if we compare the nominal salary or real terms. We say this because in the geographical area of the country considered the consumer goods market, the services and all the others have a certain quality and price. In everyday life, everyone has to consider how they meet their consumption, economy, investment, and so on, based on the revenue they own. Therefore, the purchasing power parity is set for each country, which then submits to comparability gives us some meaning. From this point of view, it can be considered a product group, an even larger group of products but finally we come to the indicator that refers to the power to meet consumer and investment requirements on a wider national and individual level of capacity To satisfy the needs of existence (quality of life). That is why the purchasing power parity indicator is one that gives a more practical and realistic sense of the evolution of a country.

Keywords: purchasing power parity; macroeconomics; exchange rate; price indicator; volume indicator (search for similar items in EconPapers)
JEL-codes: F31 O24 (search for similar items in EconPapers)
Date: 2017
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