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New Methodological Developments for the International Comparison Program

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  • Diewert, Erwin

Abstract

The paper explains new methodology that was used in the 2005 International Comparison Program (ICP) that compared the relative price levels and GDP levels across 146 countries. In this round of the ICP, the world was divided into 6 regions: OECD, CIS, Africa, South America, Asia Pacific and West Asia. What is new in this round compared to previous rounds of the ICP is that each region was allowed to develop its own product list and collect prices on this list for countries in the region. The regions were then linked using another separate product list and 18 countries across the 6 regions collected prices for products on this list and this information was used to link prices and quantities across the regions. An additional complication was that the final linking of prices and volumes across regions had to respect the regional price and volume measures that were (separately) constructed by the regions. The paper also studies the properties of the Iklé Dikhanov Balk multilateral system of index numbers which was used by Africa.

Suggested Citation

  • Diewert, Erwin, 2008. "New Methodological Developments for the International Comparison Program," Economics working papers erwin_diewert-2008-11, Vancouver School of Economics, revised 25 Sep 2008.
  • Handle: RePEc:ubc:bricol:erwin_diewert-2008-11
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    File URL: http://www.econ.ubc.ca/diewert/dp0808.pdf
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    References listed on IDEAS

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    1. Robert J. Hill, 2004. "Constructing Price Indexes across Space and Time: The Case of the European Union," American Economic Review, American Economic Association, vol. 94(5), pages 1379-1410, December.
    2. Erwin Diewert, 2010. "New Methodological Developments For The International Comparison Program," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(s1), pages 11-31, June.
    3. Erwin Diewert, 2005. "Weighted Country Product Dummy Variable Regressions And Index Number Formulae," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 51(4), pages 561-570, December.
    4. Hill, Robert J. & Timmer, Marcel P., 2006. "Standard Errors as Weights in Multilateral Price Indexes," Journal of Business & Economic Statistics, American Statistical Association, vol. 24, pages 366-377, July.
    5. Robert J. Hill, 1997. "A Taxonomy Of Multilateral Methods For Making International Comparisons Of Prices And Quantities," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 43(1), pages 49-69, March.
    6. Diewert, Erwin, 2008. "New Methodology for Linking the Regions," Economics working papers erwin_diewert-2008-9, Vancouver School of Economics, revised 09 Sep 2008.
    7. James R. Cuthbert, 2000. "Theoretical and practical issues in purchasing power parities illustrated with reference to the 1993 Organization for Economic Co‐operation and Development data," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 163(3), pages 421-444.
    8. Robert J. Hill, 1999. "Comparing Price Levels across Countries Using Minimum-Spanning Trees," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 135-142, February.
    9. Hill, Robert J, 2001. "Measuring Inflation and Growth Using Spanning Trees," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(1), pages 167-185, February.
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    Cited by:

    1. Barnett, William A. & Erwin Diewert, W. & Zellner, Arnold, 2011. "Introduction to measurement with theory," Journal of Econometrics, Elsevier, vol. 161(1), pages 1-5, March.
    2. Meade, Birgit & Muhammad, Andrew, 0. "New International Evidence on Food Consumption Patterns: A Focus on Cross-Price Effects Based on 2005 International Comparison Program Data," Amber Waves, United States Department of Agriculture, Economic Research Service, issue 03, April.
    3. Amita Majumder & Ranjan Ray & Kompal Sinha, 2014. "A Unified Framework for the Estimation of Intra and Inter Country Food Purchasing Power Parities with Application to Cross Country Comparisons of Food Expenditure: India, Indonesia and Vietnam," Monash Economics Working Papers 31-14, Monash University, Department of Economics.
    4. Robert J. Hill & Iqbal A. Syed, 2015. "Improving International Comparisons of Prices at Basic Heading Level: An Application to the Asia-Pacific Region," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 61(3), pages 515-539, September.
    5. Erwin Diewert, 2010. "New Methodological Developments For The International Comparison Program," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(s1), pages 11-31, June.
    6. 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.
    7. Shi, Wunan & Wouters, Olivier J. & Liu, Gordon & Mossialos, Elias & Yang, Xiuyun, 2020. "Association between provincial income levels and drug prices in China over the period 2010–2017," Social Science & Medicine, Elsevier, vol. 263(C).
    8. Amita Majumder & Ranjan Ray & Sattwik Santra, 2016. "Global and Country Poverty Rates, Welfare Rankings of the Regions and Purchasing Power Parities: How Robust Are the Results?," Monash Economics Working Papers 11-16, Monash University, Department of Economics.
    9. Deng, Kent & O’Brien, Patrick Karl, 2016. "China’s GDP per capita from the Han Dynasty to communist times," Economic History Working Papers 64857, London School of Economics and Political Science, Department of Economic History.
    10. Angus Deaton & Alan Heston, 2010. "Understanding PPPs and PPP-Based National Accounts," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(4), pages 1-35, October.
    11. Kent Deng & Patrick Karl O’Brien, 2014. "Creative Destruction: Chinese GDP per capita from the Han Dynasty to Modern Times," Working Papers 0063, European Historical Economics Society (EHES).
    12. Majumder,Amita & Ray,Ranjan & Santra,Sattwik, 2015. "Preferences, purchasing power parity, and inequality : analytical framework, propositions, and empirical evidence," Policy Research Working Paper Series 7395, The World Bank.

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    More about this item

    Keywords

    Index numbers; multilateral comparison methods; GEKS; EKS; Geary-Khamis; Balk; Dikhanov; Iklé; Country Product Dummy (CPD) method; basic headings; St;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • 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

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