The international comparison programme (ICP) and use of purchasing power parities (PPP)

Abstract

Over the years, National Accounts aggregates have played an important role in measuring the out-put of countries and also in comparisons of the international economies. These comparisons are made by converting the National Accounts aggregates valued in National Currencies, to a common unit through the use of an official exchange rate. Comparisons of the aggregates derived by these methods have inherent weaknesses as exchange rates do not move with movements in relative prices. As most of you may be aware of, until recently, several African countries kept their exchange rates artificially fixed for long periods.