Econometric estimation and aggregation of PPP panels for components of GDP

Huynh, L. T., Rambaldi, A. N. and Rao, D. S. P. (2014). Econometric estimation and aggregation of PPP panels for components of GDP. In: IARIW 2014 General Conference, Programme. IARIW 33rd General Conference, Amsterdam, Netherlands, (1-48). 24-30 August 2014.

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Name Description MIMEType Size Downloads
Author Huynh, L. T.
Rambaldi, A. N.
Rao, D. S. P.
Title of paper Econometric estimation and aggregation of PPP panels for components of GDP
Conference name IARIW 33rd General Conference
Conference location Amsterdam, Netherlands
Conference dates 24-30 August 2014
Convener Barbara Fraumeni
Proceedings title IARIW 2014 General Conference, Programme
Place of Publication Ontario, Canada
Publisher IARIW
Publication Year 2014
Sub-type Fully published paper
Open Access Status
Start page 1
End page 48
Total pages 48
Collection year 2015
Language eng
Abstract/Summary This paper is a part of a larger project on the construction of panels of PPPs undertaken by Rao, Rambaldi and Doran at the University of Queensland. The project aims to develop a coherent econometric framework to extrapolate PPPs using information on PPPs from the benchmark data from the International Comparison Program as well as the information on price deflators from national sources. In the first stage of the project, the econometric framework has been developed and implemented to extrapolate PPPs at the GDP level. In the second stage, as a natural progression, the method is extended to produce extrapolated PPPs for the three major components of GDP, consumption (C), investment (I) and government (G). The contributions of the paper are in three areas. The first is on the specification of structural models to explain the price level of the components of GDP. There are no ready-made results on the structural determinants of the price level for C, G and I. Therefore, we bring in elements of the macroeconomic literature to define the economic models for C, I and G. Through these economic models, groups of variables are identified and included in the econometric estimation of the price level for each component. The second contribution is on econometric methodology. Here we propose to use a bootstrap estimation approach to incorporate the statistical uncertainty associated with the estimation of a subset of the parameters of the model that was ignored by the RRD method. The paper makes use of the GEKS as well as the GK methods to obtain PPPs for domestic absorption (DA) for each country and time period by aggregating the estimated PPPs of each component. The methodology is implemented in generating panels of PPPs for C, G and I for 181 countries covering the period 1970 to 2010. Using the recently released ICP 2011 benchmark results PPPs for GDP level are extrapolated for the period 1970-2012. A set of experimental calculations and extrapolations are presented which include/exclude the 2005 and 2011 benchmark results.
Q-Index Code EX
Q-Index Status Confirmed Code
Institutional Status UQ
Additional Notes Session 8C: Measuring the Size and the Structure of the World Economy II

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Created: Fri, 12 Dec 2014, 10:24:54 EST by Alys Hohnen on behalf of School of Economics