Aggregation of Economic Indicators Across Countries: Exchange Rate Versus PPP Based GDP Weights

Gulde, Anne; Schulze‐Ghattas, Marianne

doi:10.2139/ssrn.884739

Cited by 5 publications

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“…2/ See Ahmad (1992) and Guide and Schulze-Ghattas (1992) for more detailed descriptions of the bridging equations, associated R-squared values, and out-of-sample prediction properties.…”

Section: Methodological Issuesmentioning

confidence: 99%

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

Wagner

1995

IMF Working Papers

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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).

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“…2/ See Ahmad (1992) and Guide and Schulze-Ghattas (1992) for more detailed descriptions of the bridging equations, associated R-squared values, and out-of-sample prediction properties.…”

Section: Methodological Issuesmentioning

confidence: 99%

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

Wagner

1995

IMF Working Papers

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“…To address this question, this article notes that they differ less from old‐fashioned real‐GDP than sometimes supposed. Parity benchmarking contributes little more to our understanding of development than modifying the weights assigned to different countries when assessing the growth rates of aggregates and, indeed, this was why the IMF first introduced them (Gulde and Schulz‐Ghattas, 1992). As Bolt et al.…”

Section: What Is Made and What Is Paid: Ppp And The Monetary Wealth O...mentioning

confidence: 99%

The Geopolitical Economy of International Inequality

Freeman

2024

Development and Change

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This article shows that economic inequality between nations has systematically worsened in monetary terms since 1950, and that the principal explanator is inequality between blocs of nations, notably the persistent gap between the Global North and Global South. By 2022, the GDP per capita of the North was 12 times greater than that of the South, this ratio being twice as great as in 1950. This general trend has two consistent exceptions, China and Vietnam. There was also a brief reversal of the trend from 2000 to 2012. However, except for China and Vietnam, it has resumed since then. The article shows that both the Global South and North are coherent entities: they are historically stable and converge internally while diverging from each other. It assesses the implications for international inequality and convergence research and draws out some consequences for world geopolitical relations. Finally, the article sets out the case for an international classification standard that facilitates systematic research into inter‐bloc inequality.

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Wesche

1997

Open Economies Review

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Aggregation of Economic Indicators Across Countries: Exchange Rate Versus PPP Based GDP Weights

Cited by 5 publications

References 0 publications

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

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

The Geopolitical Economy of International Inequality

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