Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
PPPs A Note on Projecting Benchmark Result Art Ridgeway Based on a paper by John Baldwin and Ryan Macdonald Purchasing Power or Producing Power Parities? John Baldwin and Ryan Macdonald (forthcoming) 2 Statistics Canada • Statistique Canada 2017-05-23 Main result PPP programs as they are currently measured accord (imperfectly) with a real Gross Domestic Income concept, not a real Gross Domestic Product The comparison can be moved to a correct GDI concept with a small change – using expenditure relative PPP rather than exchange rate for the net trade balance Inter-temporal extrapolations using GDP deflators are inappropriate – GDI deflators should be used Statistical systems are not currently structured to facilitate a GDP based comparison • Increases in export and import data collection are needed for a GDP based comparison 3 Statistics Canada • Statistique Canada 2017-05-23 Projection Methods Vs Base Years US/Canada PPP Level Estimates 0.92 0.90 0.88 0.86 0.84 0.82 0.80 1990 1995 2000 2005 Benchmark (Eurostat/OECD Method) Benchmark Based on GDI GDP Projector (Base = GDP PPP Estimate in 1999) GDI Projector (Base = GDI PPP Estimate in 1999) 4 Statistics Canada • Statistique Canada 2017-05-23 Purchasing Vs Producing Power Parities The GDP PPP can be decomposed into two pieces • a contribution from domestic prices that corresponds to the GDI based reference year • a contribution from the trading gain that comes from the terms of trade Since 2000 the trading gain has often been the dominant factor 5 Statistics Canada • Statistique Canada 2017-05-23 GDP PPP Decomposed into FDE and Trading Gain Contributions Annual Producing Pow er Parity Projector Grow th and Contributions from Domestic Price Grow th and the Trading Gain 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% -1.5% -2.0% -2.5% -3.0% 2000 2001 Ctg FDE Prices 6 2002 2003 2004 Ctg Trading Gain 2005 Statistics Canada • Statistique Canada 2006 2007 2008 GDP PPP Projector Grow th 2017-05-23 Purchasing Vs Producing Power Parities The influence of the trading gain is not unique to Canada The next chart uses OECD data to compare bilateral PPP index changes between the US and Australia, Canada, New Zealand, Norway, Japan and Korea In resource exporting countries the GDP and GDI based PPPs present conflicting outcomes In resource importing countries the trading gain reinforces domestic price movements 7 Statistics Canada • Statistique Canada 2017-05-23 Result not unique to Canada Average Annual Producing Pow er Parity Projector Grow th and Contributions from FDE Prices and the Trading Gain 2003-2007 USA/Country i 5% 4% 3% 2% 1% 0% -1% -2% -3% -4% Australia Canada New Zealand Norw ay Commodity Exporters Ctg Final Domestic Expenditure Prices 8 Japan Korea Commodity Importers Ctg Trading Gain Statistics Canada • Statistique Canada GDP Based PPP Projector 2017-05-23 Conclusions Current statistical systems facilitate a purchasing power parity based on GDI Producing power parities projections in Canada will in future be based on GDI rather than GDP Further work is needed on producing power parity estimates and those that have been calculated are viewed as relatively inaccurate should be used with caution 9 Statistics Canada • Statistique Canada 2017-05-23