@georgemagnus1 @adam_tooze @Brad_Setser @blackrock @SoberLook I think there is an even bigger problem, George. For the PPP adjustment to be meaningful, a country’s GDP – which is just a proxy measure for the size of its “real” economy – must bear the same relationship to its “real” economy as does the country you are comparing it...
@georgemagnus1 @adam_tooze @Brad_Setser @blackrock @SoberLook ...with. This means the PPP adjustment can tell you something useful when you look at a group of similar economies with similar institutions. Comparing Germany with France on a PPP-adjusted basis, for example, can be a useful exercise, whereas comparing Germany with India...
@georgemagnus1 @adam_tooze @Brad_Setser @blackrock @SoberLook ...becomes a lot more problematic.
If China wrote down bad investment more or less in line with other countries, comparing Germany with China would be problematic in the same way, but given that Chinese GDP means something completely different in relationship to its real...
If China wrote down bad investment more or less in line with other countries, comparing Germany with China would be problematic in the same way, but given that Chinese GDP means something completely different in relationship to its real...
@georgemagnus1 @adam_tooze @Brad_Setser @blackrock @SoberLook ...economy (among other things it is an input measure, not an output measure), the whole PPP exercise involving China is almost meaningless because it involves a real adjustment on two non-comparable measures.
There are of course problems with comparing countries on an...
There are of course problems with comparing countries on an...
@georgemagnus1 @adam_tooze @Brad_Setser @blackrock @SoberLook ...exchange-rate adjusted GDP, but the PPP adjustment is an improvement only within limited groups of countries. It is not an improvement when used to compare a wide variety of countries. I am surprised that the World Bank doesn’t get it. This is just basic math.
