A Review of PPP-Adjusted GDP Estimation and its Potential Use for the Fund's Operational Purposes

February 1, 1995

Preview Citation

Format: Chicago

Nancy L Wagner. A Review of PPP-Adjusted GDP Estimation and its Potential Use for the Fund's Operational Purposes, (USA: International Monetary Fund, 1995) accessed December 22, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

International comparison of economic aggregates, expressed in domestic currencies, requires their conversion into a common numeraire currency such as the U.S. dollar or the SDR. Since market (or official) exchange rates are subject to fluctuations which may result in comparisons that do not reflect cross-country differences in real economic activity, it is often recommended that purchasing power parity (PPP) rates be used for conversion instead of exchange rates. It is generally agreed that PPP rates are conceptually appropriate conversion factors. However, their practical implementation raises questions regarding the quality of the PPP indices which are currently available. This paper reviews the data and methodology underlying the construction of PPP indices, with particular emphasis on the PPP-based estimates of GDP used in the Fund’s World Economic Outlook and the World Bank’s World Development Report, and examines some of the issues associated with the use of such PPP-based estimates of GDP for the Fund’s operational purposes (such as quota calculations or determination of SAF or ESAF eligibility).

Subject: Exchange rates, Expenditure, Foreign exchange, Market exchange rates, National accounts, Public investment and public-private partnerships (PPP), Purchasing power, Purchasing power parity

Keywords: Countries' PPP, Exchange rates, GDP estimate, GDP share, Global, ICP estimate, ICP price survey, ICP survey, ICP-style price survey data, Market exchange rates, PPP conversion factors, PPP index, PPP-adjusted GDP, Price level, Public investment and public-private partnerships (PPP), Purchasing power, Purchasing power parity, Real GDP, U.S. dollar, WP

Publication Details

Pages:

34
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1995/018
Stock No:

WPIEA0181995
ISBN:

9781451843613
ISSN:

1018-5941

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