In
the present paper an index to measure the changes in the Absolute Purchasing
Power Parity. in the short term of a group of territories that conform an unique
market, using the information of the Harmonized Index of Consumer Prices and the
Exchange Rates. This measurement is utilized to study the change in relative
prices of the countries of the European Union for the period 1991-2002, and the
fulfillment of the theory of the Relative Purchasing Power Parity, taking as a
reference the Absolute Purchasing Power Parity in the reference time of the
Price Index. The difficulties found to do these comparisons have given rise to
multitude of jobs that can be classified in two large groups. In the first group
are the efforts focused to find the best instrument to do comparable the figures
of the distinct economies. In this line, it is emphasized the use and the
advances in the index numbers theory [for a historic revision applied to price
index see Diewert, W. (1993), for a theoretical revision see Balk, B. (1995) and
Hill, T. (1988)] and the jobs carried out in the International Program of
Comparison (ICP), program belonging to the statistical division of United
Nations with near 35 years of life, and whose objective is to produce
estimations of the National Gross Product and its components, that can be
comparable among countries in real terms. It utilizes the concept of Purchasing
Power Parity (PPP), [UN (1992)]. In the same line, the European Program of
Comparison is developed by Eurostat and the OCDE since 1980. In the second group
the investigations based in the unit price law and the theory of of the PPP to
explain the behavior of the rate of change among two or more countries. In this
case, the objective is focused in the analysis of the economic implications of
its fulfillment or not, and how being able to test its fulfillment [Cheung, AND
W., Lai, K. (2000), Engel, C. (2000), Reads, M. (1976), Taylor, A. (2001)] This
job is inside of the first group of investigations. An index is defined to
reflect changes in the Relative Purchasing Power Parity among a group of
countries that do not share a common currency. This measurement can be obtained
from Harmonized Index of Consumer Prices (HICP), and from the Exchange Rates
among the currencies of the distinct countries. The results show the strong
distorting effect that exchange rate has upon the Purchasing Power Parity among
countries. The evolution of the internal prices of each country is a residual
factor to explain the changes in the Purchasing Power Parity. In this sense, the
apparition of euro contributes to a clear stability for the consumers whose
countries have adopted the euro than those that have not adopted yet. However,
in the euro zone systematic behaviours in some of the countries are detected
that indicate that, their Purchasing Power Parity is changing in a systematic
way, with regard to the average Purchasing Power Parity of the Monetary Union.
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