Scholarly record

ABOUT THE “BASE” VALUE OF NATIONAL CURRENCY AND THE IMPACT OF “BASE” VALUE FLUCTUATIONS ON THE WELL-BEING OF THE NATIONAL POPULATION AND COMPETITIVENESS OF NATIONAL ECONOMY

Tatyana Sizova, D. Sizova, J. Gordeeva

Abstract

Economic environment is constantly witnessing a number of discussions about undervalued or overvalued cost of national currency and the impact of currency cost on the national economy and well-being. For this purpose multiple methodologies of calculating “base” (“fair”) value of national currency and its comparison with real current market value are widely used. Although, the most common method is considered to be the one, based on purchasing power parity, some other methods, such as “bigmac index”, “iphone index” can also be used. All methods of calculating fair value of national currency are based on consumption index, whereas the authors insist on the irrelevance of using these methods and confusing conclusions that can be derived from the results received. The authors take the responsibility to offer their own methods of value calculation, based on the nature of dollar, as the world currency. The authors of the article put the following aims while presenting the materials: 1. To develop and demonstrate implementation of the most reliable and precise methods of “base” value calculation for national currency. 2. To analyse the influence of value fluctuation between market value and “base” value, to demonstrate cost fluctuation impact on the well-being of the population and on the rate of economic growth in the country. 3. To dispel interrelations between market value and “base” value of national currency for the countries with high economic development and the countries – exporters of energetic resources. The topicality of the article is predetermined by two developed and implemented methods of “base” cost evaluation for the national currency: - evaluation method, based on the input of the country into World trade; this method is considered to be the most reliable and precise by the authors; - evaluation method, based on the input of the country into world GDP (Gross Domestic Product), calculated according to PPP (purchasing power parity). Basing on the method suggested, the calculation of “base” value of national currency for 12 countries with the leading GDP and 6 countries – oil exporters is provided. Beyond the calculations the empiric analysis of the received data is demonstrated.

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