Purchasing Power Parity in East Asia: Why all the Fuss?

Louise Allsopp () and Ralf Zurbruegg ()
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Louise Allsopp: School of Economics, University of Adelaide, Australia
Ralf Zurbruegg: School of Commerce, University of Adelaide, Australia

No 2003-04, Centre for International Economic Studies Working Papers from University of Adelaide, Centre for International Economic Studies

Abstract: Purchasing Power Parity (PPP) literature is now vast with literally hundreds of papers offering tests for PPP across a broad number of countries. However, despite all the elaborate techniques employed, very little explanation is given as to why PPP is so relevant1 in policy making. This paper provides a basic understanding of PPP and shows why it is considered so important when making policy choices. The discussion is focused on the Asian economies since these have been subject to intense scrutiny following the 1997 crisis, particularly with regard to their choice of exchange rate regime and possible monetary unification.

Keywords: Exchange Rates Regimes; Purchasing Power Parity (search for similar items in EconPapers)
Pages: 14 pages
Date: 2003-03
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