Currencies, Commodities and Consumption

Discusses economic issues associated with exchange rates, commodity prices, the economic size of countries and alternatives to PPP exchange rates.

Kenneth W. Clements (Author)

9781107014763, Cambridge University Press

Hardback, published 31 January 2013

397 pages, 52 b/w illus. 69 tables
23.5 x 15.6 x 2.2 cm, 0.75 kg

'Professor Kenneth W. Clements' book is a major contribution to the literature on the important relationship between currencies, commodities and consumption. The work is creative, highly professional, and very informative. The analysis is anchored in deep historical perspective with sophisticated empirical techniques. His presentation of the material is clear and accessible. A very useful book.' Jacob A. Frenkel, Chairman, J. P. Morgan Chase International

Currency values, prices, consumption and incomes are at the heart of the economic performance of all countries. In order to make a meaningful comparison between one economy and another, economists routinely make use of purchasing power parity (PPP) exchange rates, but while PPP rates are widely used and well understood, they take a lot of effort to produce and suffer from publication delays. Currencies, Commodities and Consumption analyses the strengths and weaknesses of two alternatives to PPP. Firstly, the so-called Big Mac Index, which uses hamburger prices as a standard of measurement, and second, a less well known technique which infers incomes across countries based on the proportion of consumption devoted to food. Kenneth W. Clements uses international macroeconomics, microeconomic theory and econometrics to provide researchers and policy makers with insights into alternatives to PPP rates and make sense of the ongoing instability of exchange rates and commodity prices.

1. Introduction
Part I. Exchange Rates and Prices: 2. Purchasing power parity theory and the Big Mac Index
3. Commodity currencies and currency commodities
Part II. Commodity Prices: 4. Three facts about marijuana prices
5. Patterns in world metal prices
Part III. International Patterns of Incomes, Prices and Consumption: 6. Disparities in incomes and prices internationally
7. Affluence and food: a simple way to infer incomes.

Subject Areas: International economics [KCL], Econometrics [KCH], Macroeconomics [KCB]