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Maximizing synergies in regional
and global post-2011 activities
Requirements and challenges for linking
regional PPP updates
2nd Regional Coordinating Agencies meeting
May 27-29, 2015
Washington, DC
Background/Motivation
CURRENT EXTRAPOLATION METHODS ARE SUB-OPTIMAL
PREVIOUS REGIONAL UPDATES WERE NOT INCORPORATED
INTO GLOBAL ESTIMATES
DEVELOP FRAMEWORK AND PROCESS
for
UPDATING GLOBAL PPPs FREQUENTLY
by
LEVERAGING ON REGIONAL POST-2011 ACTIVITIES
Recap: (2011) Benchmark data requirements
DATA CATEGORY
LEVEL
Price data for all GDP components
Item level
Regional PPPs
Basic heading level (155)
National account expenditures
Basic heading level (155)
Exchange rates
Per country
Population
Per country
SURVEY
DATA
Household Consumption
Global core list prices (600+)
Housing
Housing rentals (64) and volume
Private Education
Global core list prices (7)
Government compensation
Compensation for occupations (37)
Machinery and equipment
Global core list prices (170+)
Construction
Global core list prices (50+)
Options for updating global PPPs
Extrapolation
Price surveys
Combination
•
Regional prices extrapolated using price indices and deflators
•
Regional PPP calculated for full or reduced classification
•
Global linking factors calculated based on extrapolated prices
•
Global PPPs calculated based on extrapolated linking factors and
regional PPPs (GEKS + CAR-procedure)
•
Regions conduct price surveys for full or reduced lists
•
Regional PPP calculated for full or reduced classification
•
Global linking factors calculated based on survey prices
•
Global PPPs calculated based on extrapolated linking factors and
regional PPPs (GEKS + CAR-procedure)
•
Selected GDP components OR years OR countries are extrapolated
•
Price surveys are conducted for selected GDP components OR
years OR countries
•
Other price data sources?
…Challenges with extrapolation approach
Availability and reliability of extrapolation indices
• Consumer price index
– Required at most detailed level possible; 13 COICOP categories may be
most widely available
• Rental price index, producer price index and construction cost
index
• GDP deflators
“Extrapolation-resistant areas”
• Reliable extrapolation can be challenging for non-household
consumption components, especially:
– Government compensation (note: pay scales can be obtained “easily”)
– Housing (note: at least housing volume data should be available “readily”)
…Challenges with survey approach
Ensuring sufficient comparability with the 2011 benchmark
• Updates and revisions of item lists are inevitable
• Survey frames and data quality may vary
Ensuring sufficient comparability within and between the regions
• Number of regions updating results may vary
• Timing of regional updates may vary
• Country participation may vary
Establishing process for price data validation and reporting
• Protocols and approaches need to be established
– For regional and global processes
…Challenges with combination approach
Ensuring comparability across time and space
• Countries and regions extrapolating vs. surveying price data
– Updates and revisions of item lists are inevitable
Using possible other price data sources
• Incorporation of possible “other” price data into regional
estimates
Other challenges
Region and country participation
• Synchronizing activities and approaches with ongoing EurostatOECD PPP program
• Linking CIS 2014 PPP exercise (via OECD-Russia?)
• Extrapolating results for singletons (country pairs?)
• Changes in country participation in regional updates
Challenges with specific surveys
• Productivity adjustment for government compensation
– Use 2011 factors, or calculate new set of factors for “update” years?
• Calculation of global PPPs for education
• Calculation of global PPPs for housing
Timeline
We’re
2014 here 2016
2012
ICP
2011
ICP
2018?
2013
2015
update
Combination
approach?
2017
Future to be
decided by UNSC
Summary
Global data needs for non-benchmark years
• Global core list price data
– Household consumption and special surveys (incl. housing volume)
– Regional extrapolation indices
• National account expenditures
– At desired classification level
• Regional PPPs
– At desired classification level
• Population and exchange rate data
Regional agencies
Updating global
PPPs IS POSSIBLE
…with strong
partnerships
…and with
established work
program and
processes