Subnational purchasing power of parity in OECD countries: Estimates based on the Balassa-Samuelson hypothesis

Alex Costa, Jaume Garcia, Josep Lluís Raymond and Daniel Sanchez-Serra

No 2019/12, OECD Regional Development Working Papers from OECD Publishing

Abstract: Due to the lack of Purchasing Power Parities (PPPs) at regional level, regional Gross Domestic Product (GDP) figures have been traditionally adjusted using national PPPs. The simplifying assumption that all regions of a country have the same cost of living, and implicitly that there are no regional differences in prices, might lead to regional GDP figures (adjusted for national PPPs) that are biased and might limit the design and implementation of regional policies. This paper tries to overcome this problem by estimating PPPs at subnational level (TL2 regions) for OECD countries through a new method which uses publicly available data and is based on the Balassa-Samuelson hypothesis.

Keywords: Balassa-Samuelson hypothesis; regional price levels; Regional Purchasing Power Parity (search for similar items in EconPapers)
JEL-codes: C20 E31 O47 R10 (search for similar items in EconPapers)
Date: 2019-12-16
New Economics Papers: this item is included in nep-mac and nep-opm
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:oec:govaab:2019/12-en

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