On the equivalence of weighted Country-Product-Dummy (CPD) Method and the Rao-System for multilateral price comparisons

Rao, D. S. Prasada (2005) On the equivalence of weighted Country-Product-Dummy (CPD) Method and the Rao-System for multilateral price comparisons. Review of Income and Wealth, 51 4: 571-580. doi:10.1111/j.1475-4991.2005.00169.x

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Author Rao, D. S. Prasada
Title On the equivalence of weighted Country-Product-Dummy (CPD) Method and the Rao-System for multilateral price comparisons
Journal name Review of Income and Wealth   Check publisher's open access policy
ISSN 0034-6586
1475-4991
Publication date 2005-12
Sub-type Article (original research)
DOI 10.1111/j.1475-4991.2005.00169.x
Volume 51
Issue 4
Start page 571
End page 580
Total pages 10
Editor B. van Ark
S. Klasen
Place of publication Oxford, United Kingdom
Publisher Wiley-Blackwell Publishing
Collection year 2005
Language eng
Subject C1
340402 Econometric and Statistical Methods
720299 Microeconomic issues not elsewhere classified
Abstract The country-product-dummy (CPD) method, originally proposed in Summers (1973), has recently been revisited in its weighted formulation to handle a variety of data related situations (Rao and Timmer, 2000, 2003; Heravi et al., 2001; Rao, 2001; Aten and Menezes, 2002; Heston and Aten, 2002; Deaton et al., 2004). The CPD method is also increasingly being used in the context of hedonic modelling instead of its original purpose of filling holes in Summers (1973). However, the CPD method is seen, among practitioners, as a black box due to its regression formulation. The main objective of the paper is to establish equivalence of purchasing power parities and international prices derived from the application of the weighted-CPD method with those arising out of the Rao-system for multilateral comparisons. A major implication of this result is that the weighted-CPD method would then be a natural method of aggregation at all levels of aggregation within the context of international comparisons.
Keyword Economics
Index numbers
Stochastic approach
Purchasing power
Output
Input
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status UQ

 
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Created: Wed, 15 Aug 2007, 07:16:05 EST