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Alternative Methods for Interpolating PPPs

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  • Diewert, Erwin

Abstract

The paper draws on a previous paper by Diewert and Fox which addressed two problems: (i) how to measure aggregate real output and inflation for a group of countries and (ii) how to construct measures of real GDP for a group of countries where the country measures of real GDP are comparable across time and space. In order to address both problems, it is necessary that the group of countries construct Purchasing Power Parities (PPPs). The present paper looks at the related problem of interpolating PPPs between benchmark years when PPPs have been constructed. The paper shows that the method of interpolation that was suggested by Diewert and Fox is equivalent to a variant of the method used by the Penn World Tables to interpolate PPPs between benchmarks. The interpolation methods are compared to actual OECD PPPs for the years 2001-2017.

Suggested Citation

  • Diewert, Erwin, 2018. "Alternative Methods for Interpolating PPPs," Microeconomics.ca working papers erwin_diewert-2018-11, Vancouver School of Economics, revised 25 Oct 2018.
  • Handle: RePEc:ubc:pmicro:erwin_diewert-2018-11
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    File URL: https://econ2017.sites.olt.ubc.ca/files/2018/10/pdf_paper_diewert_DP18-07-AlternativeMethodsforInterpolatingPPPs_oct2018.pdf
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    References listed on IDEAS

    as
    1. Hill, Robert J & Fox, Kevin J, 1997. "Splicing Index Numbers," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(3), pages 387-389, July.
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    More about this item

    Keywords

    Purchasing Power Parities; PPPs; ICP; OECD country statistics; inflation; price and volume indexes; Fisher indexes;

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts

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