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

44 Pages Posted: 15 Feb 2006

See all articles by Anne Marie Gulde

Anne Marie Gulde

affiliation not provided to SSRN

Marianne Schulze‐Ghattas

International Monetary Fund (IMF)

Date Written: May 1992

Abstract

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.

JEL Classification: C43, E31, F31

Suggested Citation

Gulde, Anne Marie and Schulze‐Ghattas, Marianne, Aggregation of Economic Indicators Across Countries: Exchange Rate Versus PPP Based GDP Weights (May 1992). IMF Working Paper No. 92/36, Available at SSRN: https://ssrn.com/abstract=884739

Anne Marie Gulde (Contact Author)

affiliation not provided to SSRN

No Address Available

Marianne Schulze‐Ghattas

International Monetary Fund (IMF)

700 19th Street, N.W.
Washington, DC 20431
United States

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