Question

Your company offered you an expatriate position and gave you two options to choose from. You may either move to Austria or Australia. You will receive the same salary regardless of which country you choose. A friend mentions to you that the OECD Statistics portal includes data on “comparative price levels.” Find the latest data for Australia and Austria and discuss how your purchasing power in one country will compare to the other. Which country is more advantageous? How does the OECD use concept of PPP to calculate the comparative price levels?

Answer 1

To compare the purchasing power in one country with respect to the purchasing power in another country , price indexes in both countries are seen and compared. Comparison of the price statistics reveals that consumer prices in Australia are 0.41 per cent higher than in Austria. However even after high prices,local purchasing power in Australia is more than in Austria. Thus, Australia is more advantageous country to select as an option. The price level on both the countries are divided by the OECD to calculate comparative price level in both countries.