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Measuring the Real Size of the World Economy: The Framework, Methodology, and Results of the International Comparison Program—ICP is the most comprehensive accounting ever presented by the International Comparison Program (ICP) of the theory and methods underlying the estimation of purchasing power parities (PPPs). PPPs reveal the relative sizes of economies by converting their gross domestic products and related measurements into a common currency, thereby enabling comparisons based on economic and statistical theory. By disclosing the theory, concepts, and methods underlying the estimates, this book increases the transparency of the ICP process. Greater transparency allows researchers, users of PPPs, and those involved in implementation of the program to better understand the strengths, limitations, and assumptions underlying its results. is book also provides a forward-looking view of methodological developments with an eye toward improving the quality of future comparisons. The ICP is now the largest and most complex statistical program in the world. In 2005 it included 100 countries and economies, working in parallel with the 46 countries in the Eurostat-Organisation for Economic Co-operation and Development (OECD) PPP program. Measuring the Real Size of the World Economy was prepared by the ICP Global Office in the World Bank, with contributions from the leading international experts in the fields of economics and statistics on international comparisons.

Currency values, prices, consumption and incomes are at the heart of the economic performance of all countries. In order to make a meaningful comparison between one economy and another, economists routinely make use of purchasing power parity (PPP) exchange rates, but while PPP rates are widely used and well understood, they take a lot of effort to produce and suffer from publication delays. Currencies, Commodities and Consumption analyses the strengths and weaknesses of two alternatives to PPP. Firstly, the so-called Big Mac Index, which uses hamburger prices as a standard of measurement, and second, a less well known technique which infers incomes across countries based on the proportion of consumption devoted to food. Kenneth W. Clements uses international macroeconomics, microeconomic theory and econometrics to provide researchers and policy makers with insights into alternatives to PPP rates and make sense of the ongoing instability of exchange rates and commodity prices.