Fundamentals of Purchasing Power Parities
The course introduces the concepts, data requirements, methodology, uses, and applications of Purchasing Power Parities (PPPs). It also introduces the International Comparison Program (ICP), a global statistical initiative that estimates and publishes PPPs for the world’s economies.
PPPs convert different currencies to a common currency and, in the process of conversion, equalize their purchasing power by controlling for differences in price levels between economies. They provide a measure of what an economy’s local currency can buy in another economy. PPP-based comparisons of economic output differ from market exchange rate-based comparisons as the latter do not distinguish between the relative price levels of different items in economies. PPP-based comparisons are also less impacted by the potential volatility of market exchange rates.
The demand for spatially-comparable PPP-based GDP and component expenditures is high, and PPPs are frequently applied in policy making and analyses carried out by national governments, multilateral institutions, academia, and the private sector.
Upon completing the course, participants will comprehend the key concepts, methodology, and data requirements for estimating PPPs; understand the purpose and modality of the ICP; and identify the major uses and applications of PPPs.
World Bank staff and external audiences, including researchers, consultants, clients, and partners in the fields of economics, statistics, and poverty measurement.
This course is self-paced and free. However, registration to create a user account at the World Bank Group’s Open Learning Campus (OLC) is required. Please see this document (PDF) for instructions on how to create an account and to register for the course.