Purchasing Power Parity Fails in Developing Countries, Impacting Economies Worldwide
The article tests if prices of goods in different countries are in line with each other. They used a new method to check if exchange rates are stable over time. By looking at data from 1973 to 1999, they found that most poorer countries do not have prices that match up with each other. This means that goods may not cost the same in different countries, even after considering exchange rates.