Hostname: page-component-cd9895bd7-lnqnp Total loading time: 0 Render date: 2024-12-23T06:59:26.647Z Has data issue: false hasContentIssue false
  • English
  • Français

RECENT DEVELOPMENTS IN THE INTERNATIONAL COMPARISON OF PRICES AND REAL OUTPUT

Published online by Cambridge University Press:  15 September 2009

Robert J. Hill  and
T. Peter Hill
Robert J. Hill*
Affiliation:
University of Graz and University of New South Wales
*
Address correspondence to: Robert J. Hill, Department of Economics, University of Graz, Universitätsstrasse 15/F4, 8010 Graz, Austria; e-mail: [email protected].
Get access Rights & Permissions [Opens in a new window]

Abstract

Three important current areas of research in the field of international comparisons are the construction of price indexes at the basic heading level, price indexes at higher levels of aggregation, and the linking of comparisons across regions. We consider recent innovations in each of these areas. These innovations have largely arisen out of International Comparisons Program (ICP) 2005, and hence we discuss them in this context. We give particular emphasis to the construction of price indexes at the basic heading level, because we believe it is here that the biggest problems lie. For example, the apparently anomalous results obtained for China and India in ICP 2005 can be traced back to problems at the basic heading level. We also highlight some inconsistencies in current ICP methodology and some promising areas for future research that warrant closer scrutiny in the next round of ICP.

Keywords

ICPBasic HeadingsRepresentativity BiasMultilateral MethodsLinking RegionsPrice Index
Type
Articles
Information
Macroeconomic Dynamics , Volume 13 , Supplement S2: Measurement with Theory , September 2009 , pp. 194 - 217
Copyright
Copyright © Cambridge University Press 2009

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Alterman, William F., Diewert, W. Erwin, and Feenstra, Robert C. (1999) International Trade Price Indexes and Seasonal Commodities. Washington, DC: Bureau of Labor Statistics.Google Scholar
Balk, Bert M. (1996) A comparison of ten methods for multilateral international price and volume comparisons. Journal of Official Statistics 12, 199–222.Google Scholar
Blades, Derek (2007) GDP and main expenditure aggregates. In ICP 2003-2006 Handbook, Chapter 3. Washington, DC: The World Bank.Google Scholar
Cuthbert, Jim and Cuthbert, Margaret (1988) On Aggregation Methods of Purchasing Power Parities. OECD Economics Department Working Papers, No. 56. Paris: OECD Publishing.Google Scholar
Deaton, Angus and Heston, Alan (2008) Understanding PPPs and PPP-Based National Accounts. NBER Working Paper No. 14499.CrossRefGoogle Scholar
Diewert, W. Erwin (1976) Exact and superlative index numbers. Journal of Econometrics 4 (2), 115–145.CrossRefGoogle Scholar
Diewert, W. Erwin (2002) Similarity and Dissimilarity Indexes: An Axiomatic Approach. Discussion Paper 02-10, Department of Economics, University of British Columbia.Google Scholar
Diewert, W. Erwin (2004a) Elementary indices. In Consumer Price Index Manual: Theory and Practice, Chapter 20. Geneva: International Labour Organization.Google Scholar
Diewert, W. Erwin (2004b) On the Stochastic Approach to Linking the Regions in the ICP. Discussion Paper 04-16, Department of Economics, University of British Columbia, Vancouver, Canada.Google Scholar
Diewert, W. Erwin (2008) New Methodological Developments for the International Comparison Program. Discussion Paper 08-08, Department of Economics, University of British Columbia, Vancouver, Canada.Google Scholar
Dikhanov, Yuri (1994) Sensitivity of PPP-based income estimates to choice of aggregation procedures. Paper presented at the 23rd General Conference of the International Association for Research in Income and Wealth, St. Andrews, New Brunswick, Canada, August 1994.Google Scholar
Dowrick, Steve and John, Quiggin (1997) True measures of GDP and convergence. American Economic Review 87 (1), 41–64.Google Scholar
Eltetö, Oded and Köves, Pal (1964) On a problem of index number computation relating to international comparison. Statisztikai Szemle 42, 507–518.Google Scholar
Eurostat (1983) Comparison in Real Values of the Aggregates of ESA: 1980. Luxembourg: Statistical Office of the European Communities.Google Scholar
Geary, Roy C. (1958) A note on the comparison of exchange rates and PPPs between countries. Journal of the Royal Statistical Society, Series A 121, 97–99.Google Scholar
Gini, Corrado (1931) On the circular test of index numbers. International Review of Statistics 9 (2), 3–25.Google Scholar
Hill, Robert J. (1997) A taxonomy of multilateral methods for making international comparisons of prices and quantities. Review of Income and Wealth 43 (1), 49–69.CrossRefGoogle Scholar
Hill, Robert J. (1999) Comparing price levels across countries using minimum spanning trees. Review of Economics and Statistics 81 (1), 135–142.CrossRefGoogle Scholar
Hill, Robert J. (2000) Measuring substitution bias in international comparisons based on additive purchasing power parity methods. European Economic Review 44 (1), 145–162.CrossRefGoogle Scholar
Hill, Robert J. (2005) A Note on Linking the Regions in the ICP. Mimeo, School of Economics, University of New South Wales.Google Scholar
Hill, Robert J. and Hill, T. Peter (2007) Regionalization of the International Comparisons Program: Some Implications for Price Index Construction. Discussion Paper 2007-28, School of Economics, University of New South Wales.Google Scholar
Hill, T. Peter (2004) An introduction to consumer price indices methodology. In Consumer Price Index Manual: Theory and Practice, Chapter 1. Geneva: International Labour Organization.Google Scholar
Hill, T. Peter (2007a) Estimation of PPPs for basic headings within regions. In ICP 2003-2006 Handbook, Chapter 11. Washington, DC: The World Bank.Google Scholar
Hill, T. Peter (2007b) Ring comparison linking within-region PPPs using between region PPPs. In ICP 2003-2006 Handbook, Chapter 14. Washington, DC: The World Bank.Google Scholar
Hill, T.P. (2007c) Linking PPPs and real expenditures for GDP and lower level aggregates. In ICP 2003-2006 Handbook, Chapter 15. Washington DC: The World Bank.Google Scholar
Iklé, Doris (1972) A new approach to the index number problem. Quarterly Journal of Economics 86, 188–211.CrossRefGoogle Scholar
Khamis, Salem H. (1972) A new system of index numbers for national and international purposes. Journal of the Royal Statistical Society, Series A 135 (1), 96–121.CrossRefGoogle Scholar
Rao, D.S. Prasada (2004) The Country-Product-Dummy Method: A Stochastic Approach to the Computation of Purchasing Power Parities in the ICP. Paper presented at the SSHRC Conference on Index Numbers and Productivity Measurement, Vancouver, July 2004.Google Scholar
Roberts, David (2006) Eurostat–OECD Methodological Manual on Purchasing Power Parities (PPPs). Paris: OECD.Google Scholar
Sergeev, Sergey (2003) Equi-representativity and Some Modifications of the EKS Method as the Basic Heading Level. Paper presented at the Joint Consultation on the European Comparison Programme, ECE, Geneva, 31 March–2 April 2003.Google Scholar
Summers, Robert (1973) International price comparisons based upon incomplete data. Review of Income and Wealth 19 (1), 1–16.CrossRefGoogle Scholar
Szulc, B.J. (1964) Indices for Multiregional Comparisons. Przeglad Statystyczny 3 [Statistical Review 3], 239–254.Google Scholar
vanGarderen, Kees Jan and Shah, Chandra (2002) Exact interpretation of dummy variables in semilogarithmic equations. Econometrics Journal 5, 149–159.CrossRefGoogle Scholar
Wilson, Robert J. (1985) Introduction to Graph Theory, 3rd ed.New York: Longman.Google Scholar
World Bank (2008) Global Purchasing Power Parities and Real Expenditures, 2005 International Comparison Program. Washington, DC: The World Bank.Google Scholar