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Understanding PPPs and PPP-Based National Accounts

Author Info

Listed author(s):
  • Angus Deaton
  • Alan Heston

Abstract

We provide an overview of the theory and practice of constructing PPPs. We focus on four practical areas: how to handle international differences in quality; the treatment of urban and rural areas of large countries; how to estimate prices for government services, health, and education; and the effects of the regional structure of the latest International Comparison Program for 2005. We discuss revisions of the Penn World Table, and their effects on econometric analysis, and include health warnings. Some international comparisons are close to impossible, even in theory, and in others, the practical difficulties make comparison exceedingly hazardous. (JEL C43, E01, E31, O57).

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/mac.2.4.1
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Article provided by American Economic Association in its journal American Economic Journal: Macroeconomics.

Volume (Year): 2 (2010)
Issue (Month): 4 (October)
Pages: 1-35

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Handle: RePEc:aea:aejmac:v:2:y:2010:i:4:p:1-35
Note: DOI: 10.1257/mac.2.4.1
Contact details of provider: Web page: https://www.aeaweb.org/aej-macro
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Find related papers by JEL classification:
  • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
  • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
  • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
  • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

References listed on IDEAS
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  1. repec:pri:rpdevs:deaton_pppp_version_aug_06.pdf is not listed on IDEAS
  2. Chen, Yi Vivian & Heston, Alan & Lipsey, Robert, 2000. "International and interarea comparisons of income, output and prices," Journal of Asian Economics, Elsevier, vol. 11(3), pages 363-364, December.
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Blog mentions

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  1. What does Real GDP Measure?
    by dvollrath in The Growth Economics Blog on 2014-08-29 18:32:39
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