Why are some series shown in Purchasing Power Parity (PPP) terms?

Data shown in PPP terms have been converted from national currency units to U.S. dollars using purchasing power parity conversion factors instead of market exchange rates.  Exchange rates do not always reflect international differences in relative prices. PPPs are derived from international price comparisons. Therefore, they provide a standard measure allowing comparison of real volumes between countries.

By establishing purchasing power equivalence, where one dollar purchases the same quantity of goods and services in all countries, PPP conversions allow cross-country comparisons of economic aggregates on the basis of physical levels of output, free of price and exchange rate distortions. Please consult the International Comparison Program website for more information about purchasing power parities. The PPP conversion factors in the WDI database apply only at the Gross Domestic Product (GDP) and private consumption (household final consumption expenditure) levels. Using them to convert other Local Currency Unit series to international dollars is not recommended.

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