[lbo-talk] PPP again

Doug Henwood dhenwood at panix.com
Wed Jun 23 12:46:01 PDT 2004


Wojtek Sokolowski wrote:


>Finally, higher spending (and thus higher GDP) do not necessarily
>translate to higher standards of living.

Clearly not, which is why I've said that the PPP technique has serious practical and conceptual limitations. But as with many economic yardsticks (like price indexes), it's not completely useless either. GDP per capita represents a sort of upper bound on average material welfare, though there are lots of qualitative and distributional issues involved too for sure. And PPP offers a somewhat better way of making cross-border comparisons than market exchange rates would.

Doug



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