Purchasing Power Parity (PPP)

Paper Summary:

This paper uses the example of the Starbucks Index to demonstrate PPP by taking the average price of a cup of Starbucks' coffee in U.S. dollars and factoring the cost in five separate markets. Additionally, the knowledge gained from this exercise as well as additional research and observation is used to make general observations regarding foreign exchange rates and their importance to internal economies as well as to international industry competitors that must repatriate funds.

Table of Contents:
Abstract
Introduction
Literature Review
Methodology and Results
Methodology
Results
Conclusion

From the Paper:

"Another reason firms seek to expand PPP is because this makes those markets more attractive for FDI since this climate essentially aligns their markets more efficiently with internal production. The fact is that not all FDI is meant or intended to achieve gains in production efficiency or market access. Often, firms implement FDI project because they do already have an established market and wish to move their production and manufacturing facilities closer to that market irrespective of overall cost estimates. While the production costs may be more efficient, this is not necessarily the primary motivator."

Sample of Sources Used:

• About Starbucks. (2006). Starbucks Corporate Website (online). Retrieved April 22, 2007 from: http://www.starbucks.com
• Cai, K. G. (2001). Is a Free Trade Zone Emerging in Northeast Asia in the Wake of the Asian Financial Crisis? Pacific Affairs, 74(1).
• Chinn, M. and Meredith, G. (2004). Monetary policy and long-horizon uncovered interest parity. IMF Staff Papers 51.3, 409+.
• Mcmenemy, J. (2001). The Language of Canadian Politics: A Guide to Important Terms and Concepts.Waterloo, Ontario: Wilfrid Laurier University Press.
• Mundell, Robert. "The Significance of the Euro in the International Monetary System." American Economist 47.2 (2003): 27+.

More papers on Purchasing Power Parity (PPP):

• Dissertation or Thesis # 115876 : "The Purchase Power Parity (PPP) Hypothesis"
• Analytical Essay # 142139 : "Purchasing Power Parity"
• Analytical Essay # 133374 : "Purchasing Power Parity"

APA Citation:

MLA Citation: