the law of one price and purchasing power parity单一价格定律和购买力平价

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1、BitingintotheBigMacERASMUSUNIVERSITYROTTERDAMFaculteitderEconomischeWetenschappenAlgemeneEconomieBegeleider:Dhr.Prof.J.M.ViaeneNaam:EricStefanSzwarczynskiExamennummer:271977Emailadres:eszwarczynski@hotmail.com38Tableofcontents1Introduction2LiteratureReview3

2、TheLawofOnePriceandPurchasingPowerParityTheory3.1TheLawofOnePrice3.2PurchasingPowerParity3.2.1AbsolutePurchasingPowerParity3.2.2RelativePurchasingPowerParity3.3ObstaclestoPurchasingPowerParity4TheBigMac5Data6AbsolutePurchasingPowerParityAnalysis7RelativePur

3、chasingPowerParityAnalysis8PredictingCurrencyMovements9EuroversusUSdollar10Discussion11References12DataAppendix381IntroductionFewpeopletodaydonotknowaboutTheEconomist’sBigMacIndex™thatwasfirstpublishedin1986.Sincethenthemagazinehaspublishedayearlyversionoft

4、hisindex,providingananalysisofthecurrentvalueofcurrenciesthroughouttheworld.Itisanapproachthatprovidesinterestingfoodforthoughtaboutthecurrentstatusofthepurchasingpowerparitytheory,whichplayssuchacentralroleininternationaleconomics.Theemergenceofothermeasur

5、essuchastheStarbucksLatteIndexbyTheEconomistin2004andiPodIndexbyCommoSecin2007raisesthequestionofhowwelldotheseindexesreallyperformanddotheyactuallytellusanything.Anyformofpurchasingpowerparity(PPP)hasitsoriginsinthelawofoneprice(LOP).TheLOParguesthataniden

6、ticalgood(orservice)shouldsellatthesamepriceindifferentcountriesonceconvertedtoacommoncurrency.Thebasicargumentisthatarbitrageputspressureonpricestoconverge.TheLOPconsidersone,identicalgoodbuteconomistsareofteninterestedinnationalpricelevels.ThePPPtheoryisa

7、naggregationoftheLOPandstatesthatnationalpricelevelsshouldbeequaloncetheyareconvertedtoacommoncurrency.Insteadofonegood,apackageofgoodsshouldbeequalinpricethroughtheeffectsofmarketforces.CPI’s(consumerpriceindexes)areoftenusedasmeasurementstorepresentnation

8、alpricelevels.Itiswiththesepriceaggregatesthatcomparisonsandcalculationsaremade.Section3describesinmoredetailthetheoreticalbackdropforLOPandPPP.Alinkwillalsobemadetoproblemsthatarisewhenonestartstosear