The theory of purchasing power parity works well if there are more non-tradable goods.

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The theory of purchasing power parity actually works better when there are more tradable goods, as it assumes that goods can easily move between countries and prices should be relatively similar across borders. When there are more non-tradable goods, such as services or real estate, there may be more variation in prices due to local market conditions and regulations.

The Theory of Purchasing Power Parity Works Well If There