Distance Purchasing Power Parity Calculation Research

With the world economy increasingly fierce competition,all countries want to know about their economic status.Comcern is growing over the economic differences between the international comparison program.International comparison program study found that using purchasing power parity(PPP)to analyze economics usually could get ideal result.Its calculated results closer to the actual state of the economy.Purchasing power parity(PPP)measure is based on the "law of one price" theory.There is a vat different on region or economics in China,studying the economic differences amog different Chinese provinces could use purchasing power parity(PPP)measure of course.The study of calculating purchasing power parity(PPP)based on the distance,respectively uses Minimum Spanning Trees Method and The Minimum Distance Approach to study the regional economic differences and and analyze the differences between the two kinds of empirical results.After introducing the theoretical basis of distance method,the artical respectively using Minimum Spanning Trees Method and The Minimum Distance Approach to analyze the economic development of China’s 31 provinces,and to compare the similarities and differences between these.This paper not only shows the theory of two methods in detail in this paper,but also complished the empirical analysis using the two methods and given the improved steps of empirical study with The Minimum Distance Approach.The study of calculating purchasing power parity(PPP)based on the distance choose the generalized distance as indicators to stand for regional difference.The paper finished finding the optimal path and computing the purchasing power parity(PPP)and analyzed the regional economic differences of various areas in China.This paper uses LPS as the distance measure indicator to study the economic differences amog 31 Chinese provinces with MST and MD respectively.The paper got some conclusions.Firstly,the MST empirical study is a process of from macro to micro,from the overall to local process.The MST has strong integrity,it views all areas as a whole;The process of MD is from micro to macro,from local to the whole.Secondly,the length of optimal path got with MD is much smaller than the distance of the MST optimal path,so from the perspective of the optimal path,MST is better than MD.Thirdly,the empirical analysis of MST and MD get the same purchasing power parity(PPP)sorting result.Fourthly,the empirical study results of MST and MD has feature of strong stability.Article also has some flaws: Firstly,the paper does not use WAQD and WRPD to empirical study because of data;Secondly,the conclusion of this paper is only applicable to the consumer goods;Thirdly,the process of using MD to study something need much energy and time,and the step of MD empirical study need further improvement.