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WEO Data Forum > International Dollar (PPP) - How does that work?


 
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ntaoussanis International Dollar (PPP) - How does that work?
The currency used when reporting PPP data is the "international dollar". Is that the same as the US Dollar, if not, how is it calculated.

The reason I ask is, for the GDP per capita (PPP) I need to convert those figures into Euro's and I am uncertain if its simply a question of adjusting by the euro/dollar exchange rate or not?

Thanks.
6/10/2008 9:25:55 AM
WEOModerator Re : International Dollar (PPP) - How does that work?
Thank you for your question. PPP rates are not the same as U.S. dollars. The Purchasing-power-parity (PPP) between two countries is the rate at which the currency of one country needs to be converted into that of a second country to ensure that a given amount of the first country's currency will purchase the same volume of goods and services in the second country as it does in the first. In the WEO online database, it is expressed as local currency per U.S. dollar. The advantages and disadvantages of using PPP-based exchange rates rather than market exchange rates are discussed in the Finance & Development article PPP Versus the Market, Which Weight Matters? (March 2007) and Box 1.2 of the September 2003 World Economic Outlook (WEO). Please see the WEO database's FAQ for more information.

To convert the GDP per capita in PPPs to euros, you will simply need the euro/PPP conversion rate. Unfortunately, we do not provide this series directly. What you could do is convert the GDP PPP per capita series into U.S. dollars by taking the ratio of "Gross domestic product, current prices in U.S. dollars" and "Gross domestic product based on purchasing-power-parity (PPP) valuation of country GDP" for the euro area group (see here) and multiplying it by the per capita series. Once you have the GDP per capita in U.S. dollars, then you can use your euro/USD exchange rate from your data or other external databases (EuroStat) to do the final conversion.

I hope this is clear.

Best,
Angela

6/10/2008 9:31:47 AM