Purchasing Power Parities of Currencies

Edited by D.S. Prasada Rao, Professor and Australian Research Council Professorial Fellow, School of Economics, The University of Queensland, Brisbane, Australia

'Perhaps the most significant challenge economists face when comparing economic aggregates across countries is that the data needs to be expressed in a common currency. The use of Purchasing Power Parities (PPPs) to convert national GDP's into a common currency, for example, is the recognized method to avoid the deficiencies in exchange rates. However, the methodology to produce PPPs is probably the most complex and difficult statistical activity in the world. The recently completed 2005 International Comparison Program (ICP) included 146 countries with huge variations in the size and structure of their economies and covered all components of the GDP. Because of the huge differences in the scope and scale of national economies, the ICP was organized to first produce regional PPPs followed by their linkage to produce global PPP's. Many of the problems encountered are considered in this book. The list of authors reads like a who's who in the field of international economic statistics who provide a valuable addition to the knowledge about PPPs. Purchasing Power Parities fits a critical need as it brings together the most recent significant developments to improve the estimation of internationally comparable economic indicators.'

• Contents:ForewordPART I: INTRODUCTION1. Introduction D.S. Prasada Rao2. The Compilation of Purchasing Power Parities: The Eurostat–OECD Purchasing Power Parity Programme David RobertsPART II: SYSTEM METHODS FOR PPP COMPUTATION3. Aggregation Methods in International Comparisons: An EvaluationBert Balk4. Generalised Eltetö–Köves–Szulc and Country–Product–Dummy Methods for International ComparisonsD.S. Prasada Rao5. True International Income Comparisons Correcting for Substitution BiasSteve Dowrick6. Additivity, Matrix Consistency and a New Method for International Comparisons of Real Income and Purchasing Power ParitiesItsuo Sakuma, D.S. Prasada Rao and Yoshimasa Kurabayashi7. Implicit Data Structures and Properties of Selected Additive IndicesJames Cuthbert PART III: METHODS FOR SPATIAL LINKING AND ANALYSIS OF PRICE STRUCTURES8. Similarity Indexes and Criteria for Spatial LinkingErwin Diewert9. Comparing Per Capita Income Levels Across Countries Using Spanning Trees: Robustness, Prior Restrictions, Hybrids and HierarchiesRobert Hill10. Chaining Methods for International Real Product and Purchasing Power Comparisons: Issues and AlternativesBettina Aten and Alan Heston 11. Aggregation Methods Based on Structural International Prices Sergey SergeevPART IV: APPLICATIONS 12. Purchasing Power Parities and their Policy RelevanceMichael Ward13. Purchasing Power Parity Adjustments for Productivity Level ComparisonsBart van Ark and Marcel Timmer 14. PPPs and the Price Competitiveness of International Tourism DestinationsLarry Dwyer, Peter Forsyth and D.S. Prasada Rao Index