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Computing Sub-national PPPs with CPI Data: An Empirical Analysis on Italian Data Using Country Product Dummy Models

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  • Luigi Biggeri

    (University of Florence)

  • Tiziana Laureti

    (University of Tuscia)

  • Federico Polidoro

    (Istat)

Abstract

The Italian National Statistical Office is implementing a new project for computing sub-national Purchasing Power Parities (PPPs) on a regular basis, which is based on an appropriate use of existing Consumer Price Index (CPI) data and new sources of data. Concerning the use of CPI data, in this paper the role of the Country Product Dummy (CPD) method for compiling sub-national PPPs at Basic–Heading (BH) level is analysed together with the specific issues that arise in this context, such as the need to take spatial autocorrelation among price relatives into account. The results of various experiments based on CPI data concerning 7 BHs and 19 Italian regional chief towns are presented and discussed with the aim of exploring the performance of various CPD models and analysing to what extent the type and characteristics of the data affect the estimates obtained. The statistical uncertainty associated with the ranks derived from the regional PPPs was then calculated by means of a simulation procedure. Our findings prove to be interesting and confirm that methods and CPI data for spatial comparisons are reciprocally influenced.

Suggested Citation

  • Luigi Biggeri & Tiziana Laureti & Federico Polidoro, 2017. "Computing Sub-national PPPs with CPI Data: An Empirical Analysis on Italian Data Using Country Product Dummy Models," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 131(1), pages 93-121, March.
    • Handle: RePEc:spr:soinre:v:131:y:2017:i:1:d:10.1007_s11205-015-1217-x
    DOI: 10.1007/s11205-015-1217-x
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    5. Laureti, Tiziana & Prasada Rao, D.S., 2018. "Measuring Spatial Price Level Differences within a Country: Current status and Future Developments /Medición de las diferencias de nivel de precios espaciales dentro de un país: Estado actual y evoluc," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 36, pages 119-148, Enero.
    6. Menggen Chen, 2021. "Sub-National PPPs Based on House and Real Income Disparity across China: a Distinctive Spatial Deflator," The Journal of Real Estate Finance and Economics, Springer, vol. 62(2), pages 187-219, February.
    7. Petr Jansky & Marek Sedivy, 2018. "How Do Regional Price Levels Affect Income Inequality? Household-Level Evidence from 21 Countries," Working Papers IES 2018/24, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Sep 2018.
    8. Weinand, Sebastian, 2020. "Measuring spatial price differentials: A comparison of stochastic index number methods," Discussion Papers 12/2020, Deutsche Bundesbank.
    9. Benedetti Ilaria & Laureti Tiziana & Biggeri Luigi, 2022. "Sub-National Spatial Price Indexes for Housing: Methodological Issues and Computation for Italy," Journal of Official Statistics, Sciendo, vol. 38(1), pages 57-82, March.
    10. Laureti Tiziana & Polidoro Federico, 2022. "Using Scanner Data for Computing Consumer Spatial Price Indexes at Regional Level: An Empirical Application for Grocery Products in Italy," Journal of Official Statistics, Sciendo, vol. 38(1), pages 23-56, March.
    11. Chunyun Wang & Xiaoxi Yu & Jiang Zhao, 2022. "Identifying the Real Income Disparity in Prefecture-Level Cities in China: Measurement of Subnational Purchasing Power Parity Based on the Stochastic Approach," Sustainability, MDPI, vol. 14(16), pages 1-24, August.

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