Hostname: page-component-5db58dd55d-l8wb7 Total loading time: 0 Render date: 2026-06-06T13:42:56.238Z Has data issue: false hasContentIssue false
  • English
  • Français

A note on estimating income inequality across countries using PPP exchange rates

Published online by Cambridge University Press:  01 January 2023

Jayati Ghosh
Jayati Ghosh*
Affiliation:
Jawaharlal Nehru University, India
*
Jayati Ghosh, Centre for Economic Studies and Planning, School of Social Sciences, Jawaharlal Nehru University, New Mehrauli Road, New Delhi, 110067, India. Email: jayatijnu@gmail.com
Get access Rights & Permissions [Opens in a new window]

Abstract

The use of exchange rates based on Purchasing Power Parities to compare incomes across countries and over time has now become standard practice. But there are reasons to believe that this could lead to excessively inflated incomes for poorer countries and in some cases also inflate the extent of real changes over time. Estimates of gross domestic product growth in the Chinese and Indian economies in recent years provide examples of this.

Keywords

I32N35P52Economic developmentexchange ratesglobal povertyinequalitymeasurementpurchasing power paritiessustainable development goalstrade arbitrage

Information

Type
Articles
Information
The Economic and Labour Relations Review , Volume 29 , Issue 1: Symposium on inequality in honour of AB Atkinson , March 2018 , pp. 24 - 37
Copyright
Copyright © The Author(s) 2018

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Article purchase

Temporarily unavailable

References

Atkinson, AB (2015) Inequality: What Can Be Done? Cambridge, MA: Harvard University Press.CrossRefGoogle Scholar
Cassel, G (1967 [1924]) The Theory of Social Economy (Reprints of Economic Classics Series). New York: Augustus M. Kelley.Google Scholar
Deaton, A (2010) Price indexes, inequality, and the measurement of world poverty. Report, American Economic Association, Atlanta, GA, 17 January. Available at: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.177.1688&rep=rep1&type=pdf (accessed 2 January 2018).CrossRefGoogle Scholar
Global Commission on Poverty (2017) Monitoring Global Poverty: Report of the Global Commission on Poverty. Washington, DC: The World Bank. Available at: https://openknowledge.worldbank.org/handle/10986/25141 License: CC BY 3.0 IGO (accessed 2 January 2018).Google Scholar
Heston, A, Summers, R (1996) International price and quantity comparisons: potentials and pitfalls. The American Economic Review 86(2): 20–24.Google Scholar
McCarthy, P (2013) Extrapolating PPPs and comparing ICP benchmark results. In: The World Bank (ed.) Measuring the Size of the World Economy: The Framework, Methodology, and Results of the International Comparison Program (ICP). Washington, DC: The World Bank, pp. 473–451.CrossRefGoogle Scholar
Milanovic, B (2016) Global Inequality: A New Approach for the Age of Globalization. Cambridge, MA: Harvard University Press.Google Scholar
Ravallion, M (2010) A reply to Reddy and Pogge. In: Anand, S, Segal, P, Siglitz, JE (eds) Debates on the Measurement of Global Poverty. New York: Oxford University Press, pp. 86–101.CrossRefGoogle Scholar
Reddy, SG, Pogge, T (2010) How not to count the poor. In: Anand, S, Segal, P, Stiglitz, JE (eds) Debates on the Measurement of Global Poverty. New York: Oxford University Press, pp. 42–85.CrossRefGoogle Scholar
Sen, A (1973) On Economic Inequality. Oxford: Clarendon Press.CrossRefGoogle Scholar
Sen, A (1976) Real national income. The Review of Economic Studies 43(1): 19–39.CrossRefGoogle Scholar
Summers, R, Heston, A (1984) Improved international comparisons of real product and its composition: 1950–1980. The Review of Income and Wealth 32(2): 207–262.CrossRefGoogle Scholar
Summers, R, Heston, A (1988) A new set of international comparisons of real product and price levels estimates for 130 countries: 1950–1985. The Review of Income and Wealth 34(1): 1–25.CrossRefGoogle Scholar
Summers, R, Kravis, IB, Heston, A (1980) International comparisons of real product and its composition: 1950–77. The Review of Income and Wealth 26(1): 19–66.CrossRefGoogle Scholar
The World Bank (2015) Chapter 4. Methodologies used to calculate regional and global PPPs. In: The World Bank (ed.) Purchasing Power Parities and the Real Size of World Economies: A Comprehensive Report of the International Comparison Program 2011. Washington, DC: The World Bank, pp. 203–212.Google Scholar