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Aggregation and Linking Issues

There are several issues starting with the regional comparisons. The world is divided into geographic regions on the assumption there is more homogeneity in the economies being compared including purchasing patterns and economic structure. The regional structure is not completely followed because some countries such as Japan, Korea, and Mexico are part of the OECD comparison instead of in their respective geographic regions.  Because of political considerations, some countries want to be considered for more than one comparison. (e.g., Russia in Eurostat-OECD and the CIS; Sudan and Egypt in the Western. Asia and Africa Comparisons).

In 2005, the regions (and the Eurostat-OECD comparison) were linked using prices provided by 18 countries from the ring list. The linking was done in two stages.  First, the ring prices for each of the ring countries were deflated to a regional price using PPPs coming from the respective regional comparisons.  This provided a matrix of regional prices which via the CPD produced a set of between region PPPs which when multiplied times the each country’s regional PPP calibrated it to the global level.  The aggregation was also done in two stages with linking factors computed at each level of aggregation.  The aggregation could have been done using a matrix of basic heading global PPPs as a column and the 146 countries across the rows and aggregating to the GDP in one step.

Different methods produce different results. The properties of the single vs. two stage linking need to be examined. The use of the core list which is to be priced by all countries provides different opportunities for aggregation. The affect of the changing mixture of countries by region raises the question whether countries should be linked by measures of similarity rather than by geographic region.

The use of a core list may result in the prices for some countries appear as “outliers” in the Dikhanov and Quaranta table diagnostics. Criteria need to be established for when a country’s prices for the core are or are not to be used. 

A group comprised of Y. Dikhanov, E. Diewert, A. Deaton, S. Sergeev, and P. Rao will collaborate on a paper examining these issues which will provide recommendations for TAG consideration.

 

Research Item 06: Aggregation and linking Issues

Source

Title

Paper

ICP Book

The Imposition of Within-Region Fixity in the International Comparisons Program 


Methods of Aggregation above the Basic Heading Level within Regions 

TAG05

Linking at aggregated levels

TAG05

CIS Statistical Committee – Recommendation for obtaining interim estimates for purchasing power parities

TAG05

2009 PPP Update in the Asia-Pacific Region: Results and Comparison with 2005

TAG05

Linking Basic Heading PPPs across regions 

TAG05

Linking the regions 

TAG05

Within region Basic Heading PPPs 

TAG05

Note on pricing more global core items 

TAG05

Possible approaches for the linking of the regions at the BH and aggregated levels for the ICP 2011 

TAG05

Linking the Regions in the International Comparisons Program at Basic Heading Level and at Higher Levels of Aggregation 

TAG05

Improving International Comparisons of Real Income: The ICP 2005 Benchmark and Its Implications for the Gap Between the West and China 

TAG04

Methods of Aggregation above the Basic Heading Level within Regions

TAG04

Methods of Aggregation above the Basic Heading Level: Linking the Regions 

TAG04

Linking the Regions in the International Comparisons Program at Basic Heading Level and at Higher Levels of Aggregation

TAG04

Background Note on Productivity Adjustments as a Special Case of a General Regional Linking Problem 

TAG02

Similarity Indexes and Criteria for Spatial Linking 

TAG02

The evaluation of the approaches for the linking of the regions at the aggregated levels 

TAG02

A note on the Methodology for Linking the Regions within the ICP 

TAG02

A Note on Sergeev’s Democratic Method of Linking Regions at the Basic Heading Level 

TAG02

Global GEKS 

TAG02

Approaches to Linking the Regions




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