you will find details on the adjustment of monetary measures to take account of cost of living at this link:
http://www.oecd.org/faq/0,3433,en_2825_495691_1799281_1_1_1_1,00.html
the problems of applying the theory of ppp to the real world is explored in the following article from the economist. has the level of chinese gdp been over-estimated by 40%
http://www.economist.com/finance/displaystory.cfm?story_id=10209215
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