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

Author/Editor:

Marianne Schulze-Gattas ; Anne Marie Gulde

Publication Date:

May 1, 1992

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:

Relative GDP shares are frequently used as weights in aggregations. In order to ensure that these weights reflect countries’ shares in real output, GDP data in national currencies should be converted into a common numeraire currency at purchasing power parity (PPP) rates. A review of the empirical evidence on the relationship between exchange rates and prices suggests that market (or official) exchange rates are generally poor proxies for PPP rates. The paper examines the PPP-based GDP data generated by the International Comparison Program and compares aggregations with PPP- and exchange rate-based GDP weights.

Series:

Working Paper No. 92/36

Subject:

English

Publication Date:

May 1, 1992

ISBN/ISSN:

9781451845396/1018-5941

Stock No:

WPIEA0361992

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

44

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