Purchasing power parities

Purchasing Power Parities (PPPs) represent the rates of currency conversion that equalize the purchasing power of different currencies by eliminating differences in price levels between countries. As opposed to the use of exchange rates (which can fluctuate considerably and are influenced by other factors such as currency speculation and capital flows) to make international comparisons, PPPs not only convert to a common currency but also value countries’ gross domestic incomes (GDIs) at a uniform price level, thereby allowing for improved volume comparisons. Developed in conjunction with data supplied to the Organisation for Economic Cooperation and Development (OECD) for its multilateral PPP program, the Canada/U.S. Bilateral PPP Program publishes annual estimates of PPPs, real expenditures and other variables for GDI and detailed expenditure categories. See About purchasing power parities.


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