Definitions for "purchasing power parity"
Keywords:  ppp, parity, gdp, currency, capita
The theory that, in the long run, identical products and services in different...
The principle that equivalent assets sell for the same price. Purchasing power parity is a measurement of a currency's value based on the buying power within its own domestic economy.
(PPP). An increasingly popular method of comparing production and income levels of different nations. PPP looks at what it actually costs to buy similar goods (e.g., food, housing) in various countries to determine the real purchasing power of local currencies. Many economists feel that this gives a more accurate comparison of standards of living around the world than the more traditional method of calculating gross domestic product (GDP) per capita in U.S. dollars based on official international exchange rates. For example, according to Asiaweek (June 20, 1997), China's exchange-rate-based GDP per capita in in 1996 was only $655, whereas its PPP-based per capita product was $2,900.