International dollar

The international dollar (or Geary Khamis dollar , after Roy C. Geary and Salem Hanna Khamis ) is a reference currency calculated by the World Bank .

The International Dollar originated in the 1960s at the University of Pennsylvania in the International Comparison Program . This program was commissioned by the World Bank . The aim was to determine a per capita income that is internationally comparable. The exchange rates determined on the foreign exchange market cannot guarantee this due to fixed or only partially flexible exchange rates and international capital movements.

The basis of the international dollar is the US dollar . An international dollar always equals one US dollar. The conversion factor for all other currencies is purchasing power parities (PPP). The PPP is the number of domestic currency units that are required to buy the same amount of goods domestically as can be purchased in the USA for one US dollar. The traded goods must be identical or at least comparable.

The calculations of the international dollar are laborious and the result is only an approximation of the true value.

The so-called Big Mac Index fulfills a similar function , but only takes into account the purchasing power parity of one good, the Big Mac , and is thus greatly simplified.

Other auxiliary currencies

• European currency unit
• Asian currency unit

literature

• Nuxoll: Differences in relative prices and international differences in growth rates in: American Economic Review, 1994
• R. Summers and A. Heston: The Penn World Table (Mark 5): An expanded set of international comparisons 1950–1988. In: Quarterly Journal of Economics , 1991