What Is the Difference Between Relative PPP and Absolute PPP?

Defining and Understanding PPP


A: Thank you for your terrific question!

To distinguish between the two, first consider the more common form of purchasing power parity, Absolute PPP.

Absolute PPP

The idea is expressed in more detail at A Beginner's Guide to Purchasing Power Parity Theory (PPP Theory).

Relative PPP

PPP Conclusion

to move goods across borders.