Consumer price indexes, purchasing power parity exchange rates, and updating : seventh technical advisory group meeting (September 17-18, 2012) (Anglais)

Purchasing power parities (PPPs) are calculated at each round of the international comparison program (ICP), using multilateral, symmetric, and transitive price indexes. From one round to the next, the PPPs change in a way that, at least in the last two... Voir la suite Purchasing power parities (PPPs) are calculated at each round of the international comparison program (ICP), using multilateral, symmetric, and transitive price indexes. From one round to the next, the PPPs change in a way that, at least in the last two rounds, has been consistently different from what will be predicted from the changes in domestic consumer price indexes. Between rounds of the ICP, the World Bank and the Penn World Table use local consumer price indexes (CPIs) to update the PPP and when the 2005 ICP results became available, there was a large change in many PPPs for 2005 compared with earlier published estimates for the same year, typically with the price levels in poor countries revised upwards relative to rich countries. The same happened for the 1993 round of the ICP relative to the 1985 baseline. It is generally understood that changes in PPPs will not be the same as changes in relative CPIs, even in the absence of a multitude of practical issues such as the treatment of the trade balance, the different commodity lists for CPIs and PPPs, differential hedonic quality adjustment in different countries, and changes in procedures from one round to the next. The author focuses on the difference between changes in PPPs and changes in CPIs that comes from the difference in weights; the symmetric indexes that must be used for PPPs, even for two countries, use both countries’ weights, while within-country indexes, such as CPIs, use only the weights for one country. The author uses the data from the 1993 and 2005 rounds to show that the discrepancy is both substantial and systematic, and will generally lead to an inter-round upward revision of the PPPs for poor relative to rich countries. Even so, the effect, which is very small within Organization of Economic Cooperation and Development (OECD) countries, is not as large as the actual revision in 2005. The author makes some suggestions for updating, and clarifies the relationship with the Balassa-Samuelson effect and the possible use of the Balassa-Samuelson effect for PPP updating between rounds.  Réduire