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Non-benchmark Countries

In the past different treatments have been used to make estimates of purchasing power for countries that have not taken  part in benchmark comparisons. For non-benchmark countries short-cut estimates appear to be the only feasible method at present for estimating PPPs. A paper will be commissioned to evaluate existing short-cut methods used by the Bank and in the Penn World Tables (PWT). Both rely on simple estimating equations based upon the benchmark countries. There are three main differences in the two methods.  First, the Bank has focused on GDP, alone, while in PWT GDP is disaggregated into consumption, investment, government, and the net foreign balance.  Second, the uses a regression based on educational attainment and PWT uses proxy post-adjustment indexes such as International Civil Service Commission Index, Employment Conditions Abroad and State Department allowance index. Third, the Bank uses only the latest benchmark in its estimating equation, while in PWT, information from previous benchmarks is also used. 

 




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