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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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    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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