DP1865 Does PPP-Adjusted Data Exaggerate the Relative Size of Poor Economies

Author(s): Patrick Honohan
Publication Date: April 1998
Keyword(s): Developing Countries, Purchasing Power Parity, world distribution of income
JEL(s): F43, O47
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=1865

Conventional PPP-adjusted real output measures, invaluable for making international comparisons of living standards, may greatly exaggerate the productive capacity of poor countries. The equilibrium prices of an hypothetical world of full economic integration provide an instructive basis for evaluating the potential share of different countries in world output.