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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.

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File URL: http://faculty.arts.ubc.ca/ediewert/dp1106.pdf
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Paper provided by Vancouver School of Economics in its series Economics working papers with number erwin_diewert-2011-25.

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Length: 39 pages
Date of creation: 23 Sep 2011
Date of revision: 23 Sep 2011
Handle: RePEc:ubc:bricol:erwin_diewert-2011-25
Contact details of provider: Web page: http://www.economics.ubc.ca/

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