Analysis of Purchasing Power Parity, applying the Gustav Cassel model to prices of ornamental plants sent from Guatemala to the USA and Europe
DOI:
https://doi.org/10.36958/sep.v6i2.197Keywords:
purchasing power parity, price, currencies, exchange rate, arbitrageAbstract
OBJECTIVE: analyze the Purchasing Power Parity between the USA and Europe, using as a base the price of Ornamental Plants in Guatemala. METHOD: the results of the PPP between the currencies were obtained by applying the economic contribution of Gustav Cassel, using reference prices from the ePhyto platform during January 2022, minimizing the distortion of the exchange rate due to the situation between Russia and Ukraine. RESULTS: the calculated parameters allowed establishing the PPP between the currencies of both nations; applying to the variability in their economies and freight costs, the FAC base price of Guatemala, obtaining as a first result the possibility of arbitration by the USA in the international market, which was ruled out with the analysis of the increase in inflation that The USA had from the year 2021 to the year 2022, this being 3%, which coincides with the exchange rates of the currencies, being $1.0265 for each euro, or €0.9741 for each dollar. CONCLUSION: it was possible to determine that the main challenge to obtain a PPA are the biases caused by costs within the price of the product, tariffs, free trade agreements, tax legislation, purchasing power, inflation, among other aspects.
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