International Comparisons of GDP: Issues of theory and practice

Abstract

When it comes to making international comparisons of real GDP, different views, conventions and practices are still in evidence. We set out the case for using purchasing power parity (PPP) converters for this purpose, rather than conversions based on exchange rates, and give reasons for rejecting various arguments that are still widely made to the contrary. In doing so, we provide instances of the differing current practices of international agencies, and argue the case for greater uniformity and consistency on their part. We make a number of suggestions, general and specific, for improving the quality and presentation of cross-country comparative data. Show more