Regionalization and its Implications for Price Index Construction: The Case of the International Comparisons Program

Robert Hill () and Peter Hill ()
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Peter Hill: Economic Statistics and National Accounts, OECD

No 2007-28, Discussion Papers from School of Economics, The University of New South Wales

Abstract: The International Comparisons Program (ICP) compares the purchasing power of currencies through a series of regional comparisons that are then linked together to obtain results at the global level. This process of regionalization complicates the construction of price indexes by essentially forcing the adoption of a two-stage approach. In previous rounds of ICP, data constraints have largely determined how the regions are linked. These data constraints, however, are largely absent in ICP 2005. This raises the question of how best to extend existing price index formulas to cope with the regionalization process that underpins ICP 2005. This paper attempts to answer this question, while at the same time imposing some structure on the existing literature on two-stage methods.

Keywords: ICP; Linking Regions; Fixity; Purchasing Power Comparisons; Price Index; Chaining (search for similar items in EconPapers)
JEL-codes: C43 E31 F01 O47 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2007-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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