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Exchange rates, productivity, poverty and inequality

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This article analyses differences in the wealth of nations by comparing PPP-based cross-country incomes from the Penn World Table with those derived from prevailing exchange rates. Using the Balassa (1964)-Samuelson (1964) productivity-bias framework, we introduce the 'international poverty line' and illustrate the implications for cross-country income inequality. We demonstrate that our results are not inconsistent with the previous literature when appropriately interpreted.
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Document Type: Research Article

Affiliations: 1: Economics Program, Business School, The University of Western Australia, Crawley, WA 6009, Australia 2: Financial Studies Program, Business School, The University of Western Australia, Crawley, WA 6009, Australia

Publication date: 2007-03-01

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