2019•DEStech Transactions on Economics Business and ManagementOpen access

Absolute Purchasing Power Parity in African Low-income Countries: A Time Series Analysis

Zhi-Bai ZHANG, Xiang Hui

Abstract

The validity of absolute purchasing power parity (APPP) in African low-income countries is studied. The time series method is used. It is revealed that when the US acts as the base country, APPP holds poorly in general. When an African low-income country acts as the base country, however, the validity of APPP improves obviously. The Penn effect can mainly, but not completely, account for such a difference.

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Key concepts: Purchasing power parity, Parity (physics), Purchasing power, Economics, Absolute (philosophy), Demographic economics, Relative purchasing power parity, Time series