Definition: Purchasing power standard (PPS)

Category: General concept

An artificial currency unit. Theoretically, one Purchasing power standard (PPS) can buy the same amount of goods and services in each country. However, price differences across borders mean that different amounts of national currency units are needed for the same goods and services depending on the country. PPS are derived by dividing any economic aggregate of a country in national currency by its respective purchasing power parities. http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:Purchasing_power_standard_(PPS)