Comment on Open Thread, May 5 - 11, 2014

Mon, 05 May 2014 16:06:21 GMT

Well, PPP has meaning only in the context of multiple currencies, so presumably you're trying to get a handle on some country's nominal GDP expressed in a different currency. This means you need a foreign exchange rate, a multiplier to convert units to different units.

At this point things start getting murkier. Sometimes there's a market FX rate. Sometimes there is an official FX rate (and a different black market one). Sometimes there is no reasonable FX rate at all.

The PPP rate is just one of the possibilities. Depending on the circumstances it might be more or less appropriate.

The crude meaning of GDP converted at PPP rate is "how much stuff at local prices does this country produce/consume".

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