New RER Explained
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by Kaleb
Those paying close attention will have noticed that all of a sudden all the Recommended Exchange Rates (RER) in Erepublik have changed!
The new figure is calculated in a very different way to the previous one and is much, much more accurate.
The RER is basically an evaluation of all currencies based on PPP. PPP, for those not versed in Economics, stands for Purchasing Power Parities, and is basically a representation for what you can BUY in the local economy with a set amount of currency, or another way of looking at it, how much does a specific basket of goods cost in the local currency (LC).
In ER the RER is a daily average of the price of all transactions in an economy.
So for example, if 1000 food are sold at a price of 0.5 each and 50 weapons are sold at 6 and 10 houses sold at 90. The Average Price (AP) of 1 unit of production is 0.49 LC (1700 LC total sales / 3500 units of production).
Quality affects average price in so far as the cost of production is multplied by the quality level. So the AP for 2 Q1 houses sold at 100 each would be 0.5. The AP for 2 Q2 houses sold at 200 would also be 0.5
The formula for AP is worked out with each transaction and is as follows:
AP = T / (PV * Ql * Qu)
T = Transaction value (ie 10 Q3 food at price of 2 would be T=20)
Pv = Production value (ie 1 house is 200 units)
Ql = Quality level
Qu = Quantity
The RER is then calculated as follows:
RER😕
C = AP*50
RER:G = 1 / (AP*50)
So if AP = 0.7 the RER😕
C would be 1 Gold = 35 LC and RER:G 1 LC = 0.03
Using this new formula the most valuable currencies of the top 15 countires are:
1 Sweden 9.53
2 Indonesia 11.42
3 Spain 15.02
4 UK 19.23
5 Romania 24.27
6 France 30.58
7 Norway 34.35
8 Netherlands 35.69
9 USA 35.75
10 Portugal 37.55
11 Iran 38.34
12 Turkey 44.36
13 Brazil 51.25
14 Pakistan 53.43
15 Venezuela 65.43
No surprise really that the most active economies are the ones with the strongest currency. Intense competition has clearly played a role in pushing down prices.
Keep an eye on the GDP stats as they should be adjusted shortly to factor into account the new RER figures.
UPDATE: The RER figure has been altered slightly. It is now based on an average of the daily AP figure over the last 30 days
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Comments
And where can i get these numbers? How did you get all the numbers to calculate the value of the currencies?
look at your country economy page - it\'s all on there. I\'m just explaining the formula behind the new figure
very nice Kaleb. Keep the good work 🙂
Aha ok! Now I see it. Great job Kaleb! 🙂
Wow, amazing analysis there!
Nice work.
Great. Just a question, What would be the difference between the consumer price index and the purchasing power parities?
They are similar. The CPI is mainly used for measuring inflation whereas PPP for making comparisons between currencies. PPP is based on a more compareable basket of goods whereas CPI is normally based on a much broader range of products. CPI compares the same good over time but in our model we can also use PPP as a way of measuring inflation as it is essentially an measurement of average prices.
Hmmm.. I see, thank you very much.
UPDATE: The RER figure has been altered slightly. It is now based on an average of the daily AP figure over the last 30 days
Voted. Brilliant!