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Methods of Aggregation above the Basic Heading Level: Linking the Regions


  • Diewert, Erwin


The paper explains part of the methodology that was used in the 2005 International Comparison Program (ICP) that compared the relative price levels and GDP levels across 146 countries and 5 regions. Each of the regions constructed its own set of Purchasing Power Parities (PPPs) and relative country expenditure volumes. The paper studies various methods for constructing a global set of relative country volumes and PPPs while respecting the regional parities—the fixity constraint. Two methods emerge as having good properties: a method due to Heston and Dikhanov and an alternative method due to Eurostat, the OECD and Robert Hill. Some small numerical examples illustrate the differences between the various methods.

Suggested Citation

  • Diewert, Erwin, 2011. "Methods of Aggregation above the Basic Heading Level: Linking the Regions," Economics working papers erwin_diewert-2011-25, Vancouver School of Economics, revised 23 Sep 2011.
  • Handle: RePEc:ubc:bricol:erwin_diewert-2011-25

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    References listed on IDEAS

    1. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Varieties of Crises and Their Dates," Introductory Chapters,in: This Time Is Different: Eight Centuries of Financial Folly Princeton University Press.
    2. Reinhart, Karmen & Rogoff, Kenneth, 2009. ""This time is different": panorama of eight centuries of financial crises," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 77-114, March.
    3. Pezzolo, Luciano & Tattara, Giuseppe, 2008. "“Una fiera senza luogo”: Was Bisenzone an International Capital Market in Sixteenth-Century Italy?," The Journal of Economic History, Cambridge University Press, vol. 68(04), pages 1098-1122, December.
    4. Drelichman, Mauricio & Voth, Hans-Joachim, 2010. "The Sustainable Debts of Philip II: A Reconstruction of Castile's Fiscal Position, 1566–1596," The Journal of Economic History, Cambridge University Press, vol. 70(04), pages 813-842, December.
    5. James Conklin, 1998. "The Theory of Sovereign Debt and Spain under Philip II," Journal of Political Economy, University of Chicago Press, vol. 106(3), pages 483-513, June.
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    More about this item


    Index numbers; multilateral comparison methods; Purchasing Power Parities; fixity constraint; GEKS; Geary-Khamis; Heston-Dikhanov; Eurostat-OECD-Hill;

    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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