A lot rests on the robustness of one's PPP measure.
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They are made up, supposedly to equate standards of living. Thus, they are the worst thing to use when comparing standards of living; if they worked, it would bias results toward a tie. However, they don’t work because they assume equal tastes & preferences, which is absurd.
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They're intended to equate priced of nontraded goods.
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No. They usually are based on a basket of traded and non traded goods. But a basket for 2 countries with very different purchasing patterns is ad hoc and prices should differ bc of differences in relative demand (i.e., demand for bread and rice are not equal across US and Japan).
End of conversation
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