Purchasing power parities (PPP)

Purchasing power parities (PPPs) are the rates of currency conversion that equalise the purchasing power of different currencies by eliminating the differences in price levels between countries. In their simplest form, PPPs show the ratio of prices in national currencies of the same good or service in different countries. PPPs are also calculated for groups of products and for each of the various levels of aggregation up to and including GDP. The basket of goods and services priced is a sample of all those that are a part of final expenditure: household consumption, government services, capital formation and net exports, covered by GDP. This indicator is measured in terms of national currency per US dollar.

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Keywords: ppp, purchasing power parities