Exchange rates, productivity, poverty and inequality
Abstract: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.
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: March 1, 2007