₦airaland Forum

mtisTheQubit:
IMF is correct in what it posts...e.g your economic size is half ours...the problem is that you really don't understand what PPP is..do you..explain to me without copying an pasting stuff please..

Am waiting

now you are afraid of facts



Good boy
stay in line

mtisTheQubit:
IMF is correct in what it posts...e.g your economic size is half ours...the problem is that you really don't understand what PPP is..do you..explain to me without copying an pasting stuff please..

Am waiting

Read what PPP is
We economist use PPP for so many things

These are a few learn

Purchasing power parity (PPP) is an economic theory that allows the comparison of the purchasing power of various world currencies to one another. It is a theoretical exchange rate that allows you to buy the same amount of goods and services in every country.

Government agencies use PPP to compare the output of countries that use different exchange rates.1

 You could use it to find out where to get the cheapest hamburger in the world.

PPP Calculation
The purchasing power parity calculation tells you how much things would cost if all countries used the U.S. dollar. In other words, it describes what anything bought throughout the world would cost if it were sold in the United States. The total of all those goods and services equals the country's economic output. Add the number produced in a year and you get the country's gross domestic product (GDP) as measured by PPP.

Parity is tedious to compute. A U.S. dollar value must be assigned to everything. That includes items not widely available in America. For example, there aren't too many ox carts in the United States. Also, it is doubtful that the cart's U.S. price would accurately describe its value in rural Vietnam, where it's needed to grow rice.

The World Bank computes PPP for each country in the world.2 It provides a map that shows the PPP ratio compared to the United States.3

For many developing countries, the PPP is estimated using a multiple of the official exchange rate (OER) measure. For developed countries, the OER and PPP measures are more similar. These two values are similar because the standards of living in developed countries are closer to those of the United States.1

How to Use PPP
An economist will use the PPP to compare the economic output of different nations against one another. It might be bused to determine which country has the world's largest economy. The theoretical value is also helpful to traders in foreign currency and investors holding foreign stocks or bonds as it helps to predict fluctuations in international currency and indicate weakness.2

Although it doesn't happen often, PPP is also used to set the exchange rate for new countries. It is also used to forecast future real exchange rates.

Purchasing power parity finds its greatest use in macroeconomic studies as you compare GDP. Because all countries don't use the U.S. dollar, values can be skewed.

For example, China produced 94.8 trillion yuan's worth of goods and services in 2018. Using an exchange rate of 6.97 yuan per dollar, that's $13.61 trillion U.S. dollars. The United States produced $20.54 trillion.4 However, most of the difference between the two is because the cost of living in China is much lower than it is in the United States. Since this method depends on exchange rates, China's GDP will change when its exchange rate changes.

Comparing a Country's Output
PPP recalculates a country's GDP as if it were being priced in the United States. The CIA World Factbook calculates PPP to compare output among countries.5 It estimated that China's 2017 GDP was $23.1 trillion. It's much more than the U.S. GDP of $19.4 trillion. According to PPP, China has the world's largest economy.1

You could also use PPP to find out where you could get a McDonald's Big Mac for less. In June 2019, the U.S. Big Mac cost $5.74. In China, you can get the same thing for only $3.05. The Economist's Big Mac Index reveals what a Big Mac costs in 55 countries.6

The Big Mac Index is published each year by The Economist and was created in 1986.

The Big Mac Index
Burgernomics—the study of the Big Mac index—can give an informal measure of the PPP. Like most other sandwiches, the Big Mac doesn't travel well in its final form so it's not exported. Most of its price depends on local labor and restaurant rental costs. Since labor in China is less expensive, the Big Mac costs less to produce one unit than it does in the United States. The Big Mac Index will tell you a lot about a country's cost of living. If you want to live cheap, and you can move to any country in the world, use the Big Mac Index.

Thanks to McDonald's standards, a Big Mac is basically the same sandwich anywhere in the world. You aren't getting a smaller sandwich in China because it's almost $2 cheaper. Purchasing power parity solves this problem. It recalculates the value of a country's goods and services as if they were being sold at U.S. prices.

History
PPP was created after World War I. Before then, most countries relied on the gold standard. A country's exchange rate told you how much gold the currency was worth. Most countries abandoned the gold standard to pay for the war. They printed all the money they needed, creating inflation.

After the war, the Swedish economist Gustav Cassel suggested multiplying each currency's pre-war value by its inflation rate to get the new parity. That formed the basis for today's PPP.7

PPP Theory
Purchasing power parity is based on an economic theory that states the prices of goods and services should equalize among countries over time.8 International trade allows people to shop around for the best price. Given enough time, this comparison shopping allows everyone's purchasing power to reach parity or equalization.

Why We Don't Live in a PPP World
PPP depends on the law of one price. That states that once the difference in exchange rates is accounted for, then everything would cost the same.

That's not true in the real world for four reasons. First, there are differences in transportation costs, taxes, and tariffs. These costs will raise prices in a country. Countries with many trade agreements will have lower prices because they have fewer tariffs. Socialist countries will have higher costs because they have more taxes.

A second reason is that some things, like real estate and haircuts, can't be shipped. Only ultra-wealthy global travelers can compare the prices of homes in New York to those in London.

A third reason is that not everyone has the same access to international trade. For example, someone in rural China can't compare the prices of oxen sold throughout the world. But Amazon and other online retailers are providing more real purchasing power parity to even rural dwellers.

A fourth reason is that import costs are subject to exchange rate fluctuations. For example, when the U.S. dollar weakens, then Americans pay more for imports. The most significant driver of changing exchange rate values is the foreign exchange market. It creates wide swings in exchange rate values.9 For example, in 2014, many traders shorted the euro. The European Union's currency dropped. As a result, costs throughout the EU also fell. When traders began shorting the U.S. dollar in 2017, the dollar weakened.

The Bottom Line
The best way to understand PPP is to study the Big Mac Index. This index was created as a humorous attempt to illustrate how the PPP worked by comparing the prices of a globally sold product, the McDonald’s Big Mac burger. The Big Mac Index has been published in The Economist since 1986.

Calculating for purchasing power parity allows economists to determine the cost of living in other countries compared to the United States. PPP is a good tool for comparing GDP outputs among nations. It is also used to determine which have large or small economies. But since it involves many factors such as differences in taxes, tariffs, transportations costs, import costs, and the like, the PPP calculation is highly complex. This is best done by experts.

mtisTheQubit:
there is no facts here just mumbling an stuff..
anyway, i got no biggie with Ghana just that i like to compare kenya economy with other bigger economies

the IMF says otherwise
#FACTS looking at you in the face

Shma:
GDP ppp won't tell you anything, it's basically a facade not going into the root difference,. If your dysfunctional brain is deceiving you about the basics economics you need to upgrade it. For instance China having bigger ppp than USA doesn't means China is enjoying life than USA. The quality of consumption really matters. Your productivity will be meaningless if you travel to other countries, your low quality services which will favour the natives will not apply to advance nations with high nominal GDP, it is biased towards a bigger ppp compared to nominal GDP and that should tell a lot about the cases in in Africa (Nigeria vs south Africa) Europe(Israel vs Iran) and maybe China vs USA. The bottom line is that you are nothing when you go to other nations. Your products and services will be useless when converted to foreign currency. You will not enjoy the confined cheap life you used to enjoy at your country and that's why GDP nominal is always superior to your so called PPP

ah but who said China is enjoying life than USA

The USA has 6 times the per capita of China, so it is obvious the USA is enjoying life than China.
But it is factual that China has the largest economy.


If anything is a farcade, GDP is
because GDP is the most inaccurate way to compare economies today.

PPP considers a huge set of data than GDP.

the rest of your argument is rubbish

Today, everyone wants Chinese tourist because they turn to be the largest spenders.
This has nothing to do with whether their country has a higher nominal GDP per capita or not.

It all has to do with disposable incomes
Chinese have more disposable incomes than Americans.




advise
DONT jump into conversations that you have the least understanding of.

mtisTheQubit:
we are comparing the economy size not cost of living idiot...
Now again..

Purchasing power parity (PPP) is a popular metric used by macroeconomic analysts that compares different countries' currencies through a "basket of goods" approach.

we are both saying the same thing

what do you think that basket of goods is ?



Calculating for purchasing power parity allows economists to determine the cost of living in other countries compared to the United States. PPP is a good tool for comparing GDP outputs between nations. It is also used to determine which have large or small economies.

your ego will kill you

whether you take it or not

the pain will still remain in you

as long as the facts stir you in the face

mtisTheQubit:
Some things i can take from a Nigerian but a Ghana nah ... please nigga ya just a small country trying to to be relevant ..sorry my friend

mtisTheQubit:
@just30

PPP

Purchasing power parity (PPP) is a popular metric used by macroeconomic analysts that compares different countries' currencies through a "basket of goods" approach.

exactly so

this is why PPP is considered the most appropriate way to measure a countries total goods and services traded at current prices.

Calculating for purchasing power parity allows economists to determine the cost of living in other countries compared to the United States. PPP is a good tool for comparing GDP outputs between nations. It is also used to determine which have large or small economies.



This is why the IMF use PPP in all it comprison between economies
The IMF knows that, the prices of goods and services are not the same in two economies.
PPP gives them the accuracy

mtisTheQubit:
funny for a small country like ghana to compare..your economy even less than tanzania an closer to uganda...go play with your mates..bythe way once you understand what ppp stands for then come an we gonna have a mature debate..for the time being just post sokoto to amuse folks..

Thank for tickling my fancy this morning
Kenya will always be a circus.



once you know what PPP is, you will know why China is today the world largest economy and a domineering force.

a small economy like Kenya, always trying to compare itself with countries that are far above them.
whiles you guys play the clowns in the circus, Tanzania is zooming pass you.

mtisTheQubit:
IMF says compare yourself with uganda..just check Uganda down there my friend...

IMF says, your economy is underdeveloped and smaller than Ghana's

you can take it up with them

mtisTheQubit:
A sorry Ghana smart guy just tell me what imf thinks about ths two countires..clue one is resourceless while the other its a colony full of oil,gold an cocoa beans

you can save yourself the shame and snap the entire page

what a shame kenya

dont hide the 226 and 206
you cant erase FACTS

mtisTheQubit:
dude be clear ..what ths

that is the share of the Global economy by each country.

you can freely play with it

mtisTheQubit:
stories for the gods

According to IMF your country is tiny

you are really dumb

now im laughing


you still dont has the economic might of Ghana with a 226 billion economy whiles Kenya has 206 billion.

those are the FACTS

mtisTheQubit:
i'll start using images coz your brain is slow

same Image kiddo
WAN KER

mtisTheQubit:
So let me guess you just post stuff you have no clue about....

let say you are dumb to the economics realities


all you need to know is, GDP is only used to measure financial flows
everyone has switch to PPP as a measure for goods and services traded in and economy,


this is the real chart https://www.imf.org/external/datamapper/PPPSH@WEO/OEMDC/ADVEC/WEOWORLD/CHN


CHINA has 19% share ofthe global economy
USA has 14%



Kenya has 0.14%
Ghana has 0.15%
Ethiopia has 0.18%
Tanzania has 0.14%
Nigeria has 0.85%
SA has 0.56%
Egypt has 1%
Morocco has 0.28%
Algeria has 0.48%
Angola has 0.14%

now go and sleep

mtisTheQubit:
IMF for simple minds

you are wrong kiddo

Advantages of PPP. A main one is that PPP exchange rates are relatively stable over time. By contrast, market rates are more volatile, and using them could produce quite large swings in aggregate measures of growth even when growth rates in individual countries are stable. Another drawback of market-based rates is that they are relevant only for internationally traded goods. Nontraded goods and services tend to be cheaper in low-income than in high-income countries. A haircut in New York is more expensive than in Lima; the price of a taxi ride of the same distance is higher in Paris than in Tunis; and a ticket to a cricket game costs more in London than in Lahore. Indeed, because wages tend to be lower in poorer countries, and services are often relatively labour-intensive, the price of a haircut in Lima is likely to be cheaper than in New York even when the cost of making tradable goods, such as machinery, is the same in both countries. Any analysis that fails to take into account these differences in the prices of nontraded goods across countries will underestimate the purchasing power of consumers in emerging market and developing countries and, consequently, their overall welfare. For this reason, PPP is generally regarded as a better measure of overall well-being.

mtisTheQubit:
You really don't know what is PPP..do you? Just tell us what the hell PPP means...

no need for that

just google it up at your fingertip

Just go to the IMF page and read https://www.imf.org/external/pubs/ft/fandd/2007/03/basics.htm

mtisTheQubit:
You love imf...their take

This is base on IMF WEO measure

using market rates


you are free to check using their main approach to comparing economies.

mtisTheQubit:
Question sir? What is PPP?

just google the meaning of PPP and you will know

simple question

which country has the world largest economy ?

mtisTheQubit:
So GDP is PPP? Is that what they teach in kumasi

yes
GDP is the market base approach in measuring all services and goods produce in a country.
PPP is the most accurate approach to measuring all goods and services produced in a country.

This is why the IMF and OECD use it for most of the comparison between countries by sourcing their data from ICP.

go and learn https://www.imf.org/external/pubs/ft/fandd/2007/03/basics.htm

mtisTheQubit:
Actually no..Ghana is a small economy. ..you don't feature anywhere in largest economies in africa..just compare with your mates son

you are dumb

i am giving you facts and you are giving me innuendo



The IMF and World banks already knows the largest economies in Africa

the world bank use a market base approach to calculate that

The IMF and OECD uses the PPP approach and Kenya does not feature in the first 10.

Austine1213:
Please tell em, people don't understand how economics works

or you dont understand economics

GDP and PPP are the same thing

PPP is more accurate because it takes a larger amount of data sample.

Economics has changed since the introduction on ICP, the big mac index and all of that.

Austine1213:
Economics doesn't work that way

actually that is how it works
you need to update you knowledge.

Economics has seen massive changes to get accurate, Thanks to China

Austine1213:
Nigeria retail sector is 80% informal (correct me if I'm wrong)

But i get that props to you guys but yall not reaching up to your potential

It is still a retail sector, isnt it ?

jl115:
equality not equity

And productivity is expressed as a percentage of GDP.... GDP alone does not measure the productivity of an economy but simply the total activity that happens within that economy.

A large economy like that of India or Nigeria isn't nearly as productive as smaller economy like Australia, Singapore or South Africa for example.

But to be fair neither you nor @gallivant know much about the subject

okay you sound funny
the word is Equity and not equality please
go and grasp the meaning of both.

Exactly, productivity is a percentage of GDP.
The base factor is GDP.

To compare the productivity of two economies, what do you do?

you take their PPP and strike a percentage base on population.
The country with the largest PPP and least population obviously wins.

since we are on the same page on productivity, The you know

jl115:
Except GDP is the value of ALL goods and services not just consumer goods and services as with a retail market.

I studied this sh1t, hence you certainly don't know more than I do!!

I studied it too and from this small discussion
i know more than you.

and who said GDP is not the measure of all goods and services?


The US used to be the largest consumer market in the world until China PPP surpassed them.
Thereby making China the largest economy and the largest consumer market.

TayserMahri:
You'd imagine a hobbit like this one would know population has nothing to do with PPP.

and who said population has anything to do with PPP ?

We were discussing productivity and productivity has everything to do with population.



Zombie

gallivant:
Give it a rest. Ghana is a small economy at the mercy of oil prices.

hahaha im laughing

the Ghanaian economy is more diversified
oil prices does not even affect her.



all African economy a small economies, except some are larger than others.

gallivant:
Lol

You are a blockhead. You failed to prove how PPP makes Ethiopia a more productive economy compared to Kenya. Stop using China to compare apple's and oranges, fact is you have a zero grasp on economic concepts. Thanks for wasting my time.

WAN KER you are free to go and check Ethiopia PPP and compare it to yours
They have a 60 billion lead on your country.

we knoe Ghana is a small economy especially when all of Africa's economy combine does not make up to 5% of the global ecconomy.

But Ghana economy will forever remain larger than your countries economy.

mtisTheQubit:
I know you like to throw words so folks might follow but nah.. Ghana is a small country economically despite all that gold and oil..Anyway question? what happened...2013

gallivant:
What is this fool talking about? PPP encompasses things like exchange rates to bring an equilibrium or parity in currencies to measure purchasing power of the different denominations on the same product. It doesn't measure economic productivity. You are stupid and wasting my time.

hahaha


my ribs

since youve now come to understand what PPP is,
My job here is done.

PPP is the reason why China is the largest economy in the world.

gallivant:
You are chasing your own tail hobbit.

hahaha

WAN KER

dont worry

this level of desperation from you needs to be channel to the right places so that it will yield positive results for Kenya.

gallivant:
Stop chasing your tail like a mongrel. Bankrupt countries and individuals don't get loans, they get bailouts. Sinking banks and companies don't get loans, they get bailout packages. Ghana defaulted on her future on the first bailout so worry about that.

The Ghanaian economy is great
That is why we have a larger economy than you have.

countries who sink themselves in huge debts turn to be less developed and less productive as the debt holds them back.
That is why kenya is lacking behind Ethiopia and Tanzania has even surpassed you by a slim margin