Posted on 12/08/2004 4:18:33 AM PST by Stoat
I am not from the EU countries, but get provoct when bullshit hits. I have neutral stance here.
as a frmer European director for my company in the financial world, I wouldn't exactly call myself unable to grasp the economic principles.
Your PPP example does not take into consideration the various taxes and social contributions that take gross pay to net pay.
There are also many variables you encouter in the real world as opposed to "PPP studies".
Purchasing Power Parity
What is Purchasing Power Parity?
Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries. This means that the exchange rate between two countries should equal the ratio of the two countries' price level of a fixed basket of goods and services. When a country's domestic price level is increasing (i.e., a country experiences inflation), that country's exchange rate must depreciated in order to return to PPP.
The basis for PPP is the "law of one price". In the absence of transportation and other transaction costs, competitive markets will equalize the price of an identical good in two countries when the prices are expressed in the same currency. For example, a particular TV set that sells for 750 Canadian Dollars [CAD] in Vancouver should cost 500 US Dollars [USD] in Seattle when the exchange rate between Canada and the US is 1.50 CAD/USD. If the price of the TV in Vancouver was only 700 CAD, consumers in Seattle would prefer buying the TV set in Vancouver. If this process (called "arbitrage") is carried out at a large scale, the US consumers buying Canadian goods will bid up the value of the Canadian Dollar, thus making Canadian goods more costly to them. This process continues until the goods have again the same price. There are three caveats with this law of one price. (1) As mentioned above, transportation costs, barriers to trade, and other transaction costs, can be significant. (2) There must be competitive markets for the goods and services in both countries. (3) The law of one price only applies to tradeable goods; immobile goods such as houses, and many services that are local, are of course not traded between countries.
Economists use two versions of Purchasing Power Parity: absolute PPP and relative PPP. Absolute PPP was described in the previous paragraph; it refers to the equalization of price levels across countries. Put formally, the exchange rate between Canada and the United States ECAD/USD is equal to the price level in Canada PCAN divided by the price level in the United States PUSA. Assume that the price level ratio PCAD/PUSD implies a PPP exchange rate of 1.3 CAD per 1 USD. If today's exchange rate ECAD/USD is 1.5 CAD per 1 USD, PPP theory implies that the CAD will appreciate (get stronger) against the USD, and the USD will in turn depreciate (get weaker) against the CAD.
Relative PPP refers to rates of changes of price levels, that is, inflation rates. This proposition states that the rate of appreciation of a currency is equal to the difference in inflation rates between the foreign and the home country. For example, if Canada has an inflation rate of 1% and the US has an inflation rate of 3%, the US Dollar will depreciate against the Canadian Dollar by 2% per year. This proposition holds well empirically especially when the inflation differences are large.
A strange thing is that the worlds richest man is a Swede. Kamprad. The man who own IKEA
lets cut and paste.
He had an excellent concept. I have bought IKEA stuff for my Daughter while living in Europe.
Good products.
LOL, it beats, typing with my thick finger(1)
You have to do better than that. I tell you I know the top 3% of the incomers in the States are richer than the top 3% in any other country. Since they have so much of the wealth it makes GDP for average Americans not that high at all. ADD to that the hugh investment in military and it might happend that average people in Irland and Denmark are better off.
I love Luxembourg wish I was a citizen of that country. I tell you nothing can match the wealth of that small nation
Are you getting ready to cry?
Ikea is cheap and looks nice
Military Budgets are paid through our existing taxes. While you are correct that we have enormeous expenses being the Worlds Policeman,(I don't like it, but nobody else applied for the job) that other countries do not encounter, or want the US to shoulder the burden, Those expenses come out of the existing budget, they are not added independently.
EU Governments are going broke because of their enormeous Social expenses that can't be met any more.
I.E. Germany:
Social security=19.5 % matched by Employer
Health Insurance: 15.9% matched
Unemployment: 1.5% matched
Long term care: 2% matched
East unification 8% matched
Eco taxes:
At Purchase: 16% VAT
5 times the price for such things as Gas, Oil, Electricity, etc
All those items are not considered in measuring PPP
Almost if you have been there you would like it too. Almost like a fairy tale. Castles etc plus a lot of finance is going on there. But Norway will do for me. I could have been more unfortunate. Like born in Africa etc
Make an apllication and immigrate?
They need people, they are running short.
Well electricity is not that expensive. Just to make a small compareson in my country we pay 2700 dollar on average for medicare compare to your 4100 dollar. ineffective
you know that an average Luxembourg man earns almost twice as much as a man in US. PPP. And the US is a rich nation
what is your country?
vel jeg må ut a drikke litt nå. Skal på vorspiel, fest og nachspiel. Blir noen øl
IRELAND'S ECONOMIC MIRACLE
Address:http://www.iedm.org/library/art23_fr.html
Sweden?
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