What are international-$ and why are they used to measure incomes?

Much of the economic data we use to understand the world, such as the incomes people receive or the goods and services firms produce and people buy, is recorded in the local currencies of each country. That means the numbers start out in rupees, US dollars, yuan, and many others, and without adjusting for inflation over time. This is known as being in “current prices” or “nominal” terms.

Before these figures can be meaningfully compared, they need to be converted into common units. International dollars (int.-$) are a hypothetical currency that is used for this.

The idea is simple: one international dollar should buy the same quantity and quality of goods and services, no matter where or when it is spent. To achieve this, international dollars adjust for two things. First, they account for inflation within each country, so that values from different years can be compared (showing “constant” prices). Second, they account for differences in living costs across countries. This second adjustment uses purchasing power parity (PPP) rates, which reflect how much local currency is needed to buy what one US dollar would buy in the United States.

The United States is the benchmark, so that one 2021 int.-$ is defined as the value of goods and services that one US dollar would buy in the US in 2021. One 2011 int.-$ is defined in the same way, but for prices in 2011.

You can read more in our article, What are international dollars?