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Unformatted text preview: correlated with the local hourly wage (in dollars). What about general prices? Most goods have nontraded and traded components, so the economy-wide price level should follow the same patterns observed above. Strong positive relationship between U.S. price level and GDP per person. Deviations in PPP vary systematically. Figure 22.2 (b): Price Levels in Rich and Poor Countries Panel (b) shows that richer countries (measured by higher GDP per person) tend to have higher overall price levels (measured in a common currency). Source: Michael R. Pakko and Patricia S. Pollard, 2003, Burgernomics: A Big Mac Guide to Purchasing Power Parity, Review, Federal Reserve Bank of St. Louis, November, 928....
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This note was uploaded on 03/02/2012 for the course EC 340 taught by Professor Ballie during the Spring '10 term at Michigan State University.
- Spring '10