Purchasing Power Parity (PPP) is calculated by dividing the price of a basket of goods in one location by the price of the same basket in another location. This is a popular macroeconomic analysis metric used to compare economic productivity and standards of living between countries. However the PPP does not reflect reality due to differences in incomes, local costs, taxes, tariffs, and competition. | Emmanuel Mwamba

ABC of PPP 😌 The Purchasing Power Parity indicator can be used to compare economies regarding their GDP, labour productivity and actual individual consumption, and in some cases to analyse price convergence and to compare the cost of living between places. It is based on the law of one price, which means if there are no transaction costs or trade barriers for a particular good, then the price for that good should be the same at every location on earth. The calculation of the PPP, according to t