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Converting national currency into PPP adjusted USD watch

    • Thread Starter

    I want to convert amounts given in naira (Nigeria) and cédi (Ghana), into PPP adjusted USD to make them comparable. The PPP conversion rates that I have used are these :
    https://fred.stlouisfed.org/series/PPPTTLNGA618NUPN - for Nigeria
    https://fred.stlouisfed.org/series/PPPTTLGHA618NUPN - for Ghana

    If I understand these rates correctly, they are calculated by the formula GDP_National currency/GDP_PPP =PPP Conversion rate. So, to convert a value denominated in the national currency to PPP adjusted USD, I must apply the following formula: Value_National currency * PPP conversion rate = Value_PPP

    The conversion rates for both Ghana and Nigeria both increase strongly over the time period. Similarly, the nominal values increase strongly over the time period because of inflation in both countries. Hence, when I use the formula above, the values explode – and by the end of the periods for both countries, they are completely unrealistic (they are unrealistically high already at the start of the periods, but by the end they are simply absurd). I am therefore suspecting that I’m doing something wrong, either with the formula, or that I am using something that is not intended as a PPP conversion rate.

    Any ideas or advise on where the problem could be will be deeply appreciated!

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Updated: February 23, 2018
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