Over time consistency of PPP results in the OECD countries

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized International Comparison Program Over time consistency of PPP results in the OECD countries A numerical example Francette Koechlin 6 th Technical Advisory Group Meeting October 3-4, 2011 Washington DC

2 Over time consistency of PPP results in the OECD countries: a numerical example TAG, October 3-4, Overall differences between PPP GDP series and GDP extrapolations from different benchmark years between 2000 and 2009 can be summarized in Table 1. What does Table 1 show? Table 1 shows 5 sets of per capita volume indices for GDP, Individual Household consumption, Government and GFCF for OECD countries with OECD as reference (OECD = 100) from 2000 to All indices have been calculated using the most recent National Accounts and population figures. ** 4 sets of Indices calculated using PPPs of different "benchmark" years (2000, 2002, 2005, 2008) applied to GDP (an other aggregates) at constant prices (no adjustment for Terms of trade) - Series at constant prices and PPPs ** 1 set of indices calculated by applying benchmark PPPs to current GDP(and other aggregates) - PPP series or series at current prices and PPPs At the OECD we talk about series of current PPPs and not benchmark PPPs as the frequency of calculation is different between OECD European countries and OECD non European countries Note : What are current PPPs? Within the framework of the Eurostat-OECD PPP Programme, PPPs for GDP are calculated on an annual base for the European countries and every three years for the non European countries. PPPs for intermediate years for non European OECD countries are estimated using implicit price deflators for GDP (More precisely, they are calculated as the geometric mean of PPPs based on two successive benchmark years; for example PPPs for the year 2006 for Canada are calculated as the geometric mean of the PPPs extrapolated forward from 2005 and backwards from 2008). Time series for PPPs for Individual Household consumption and Actual individual consumption are calculated the same way. Size of the differences between PPP and NA series - by country and by main aggregate The differences can be quite significant between PPP benchmark results and GDP extrapolations depending on countries. The reasons are multiple and will be not be developed here. The last column of the table indicates both in absolute terms and in % the maximum differences observed in 2008 between the results of the different benchmark years. For GDP, in general differences for OECD countries are relatively small (2-3 %) but they can reach high levels 27 % for Norway (because of the terms of trade) even 40 % for Russia. There are also marked differences for countries from Eastern Europe where rapid changes in price structures have been observed in the recent years. The biggest differences are in general observed between 2000 and 2008 but it is not systematic. How to read & interpret Table 1 1

3 Looking at results for other main aggregates, one can notice that differences for Individual household consumption are much smaller than for GDP. They are only over 10 % only for a few countries. Looking at Government (individual and collective services) and GFCF much wider differences can be observed - from 10 % to 40 % for most of the countries for GFCF. Extreme values can also be observed for Government. These large differences are to be explained by both by changes in price structures from one year to another but also by changes in methodology. Note the huge differences for Eastern European countries and Russia for Government. What does the OECD Publish? The OECD has followed a two-way strategy concerning the choice between benchmark and extrapolation results for international comparisons. The OECD publishes time series based on both current and constant PPPs. The former enter under the heading GDP per capita at current prices and current PPPs, the latter are labelled as GDP at price levels and PPPs of The accompanying text recommends GDP per capita data based on constant prices and constant PPPs for comparisons over time. Thus, these data are best suited to answer a question such as: How has the relative position of a country s GDP per capita changed, given its measured growth performance? Current (benchmark) PPPs are put forward as the appropriate tool to compare GDP levels for the latest period available, as they reflect the most recent and most relevant price structure. These data are wellsuited to respond to the question: What is a country s position in terms of GDP (per capita), given the most recent set of international prices? The OECD also promotes more and more comparisons of Actual individual consumption and Disposable income instead of GDP to compare material well-being. How to read & interpret Table 1 2

4 GDP AUSTRALIA GDP AUSTRALIA % GDP AUSTRALIA GDP AUSTRALIA GDP AUSTRALIA Cur IH AUSTRALIA IH AUSTRALIA % IH AUSTRALIA IH AUSTRALIA IH AUSTRALIA Cur GOV AUSTRALIA GOV AUSTRALIA % GOV AUSTRALIA GOV AUSTRALIA GOV AUSTRALIA Cur GFCF AUSTRALIA GFCF AUSTRALIA % GFCF AUSTRALIA GFCF AUSTRALIA GFCF AUSTRALIA Cur GDP AUSTRIA GDP AUSTRIA % GDP AUSTRIA GDP AUSTRIA GDP AUSTRIA Cur IH AUSTRIA IH AUSTRIA % IH AUSTRIA IH AUSTRIA IH AUSTRIA Cur GOV AUSTRIA GOV AUSTRIA % GOV AUSTRIA GOV AUSTRIA GOV AUSTRIA Cur GFCF AUSTRIA GFCF AUSTRIA % GFCF AUSTRIA GFCF AUSTRIA GFCF AUSTRIA Cur GDP BELGIUM GDP BELGIUM % GDP BELGIUM GDP BELGIUM GDP BELGIUM Cur IH BELGIUM IH BELGIUM % IH BELGIUM IH BELGIUM IH BELGIUM Cur GOV BELGIUM GOV BELGIUM % GOV BELGIUM GOV BELGIUM GOV BELGIUM Cur GFCF BELGIUM GFCF BELGIUM % GFCF BELGIUM GFCF BELGIUM GFCF BELGIUM Cur GDP CANADA GDP CANADA % GDP CANADA GDP CANADA GDP CANADA Cur IH CANADA IH CANADA % IH CANADA IH CANADA IH CANADA Cur GOV CANADA GOV CANADA % GOV CANADA GOV CANADA GOV CANADA Cur GFCF CANADA GFCF CANADA % GFCF CANADA GFCF CANADA GFCF CANADA Cur Table 1 3

5 GDP CZECH REPUBLIC GDP CZECH REPUBLIC % GDP CZECH REPUBLIC GDP CZECH REPUBLIC GDP CZECH REPUBLIC Cur IH CZECH REPUBLIC IH CZECH REPUBLIC % IH CZECH REPUBLIC IH CZECH REPUBLIC IH CZECH REPUBLIC Cur GOV CZECH REPUBLIC GOV CZECH REPUBLIC % GOV CZECH REPUBLIC GOV CZECH REPUBLIC GOV CZECH REPUBLIC Cur GFCF CZECH REPUBLIC GFCF CZECH REPUBLIC % GFCF CZECH REPUBLIC GFCF CZECH REPUBLIC GFCF CZECH REPUBLIC Cur GDP DENMARK GDP DENMARK % GDP DENMARK GDP DENMARK GDP DENMARK Cur IH DENMARK IH DENMARK % IH DENMARK IH DENMARK IH DENMARK Cur GOV DENMARK GOV DENMARK % GOV DENMARK GOV DENMARK GOV DENMARK Cur GFCF DENMARK GFCF DENMARK % GFCF DENMARK GFCF DENMARK GFCF DENMARK Cur GDP ESTONIA GDP ESTONIA % GDP ESTONIA GDP ESTONIA GDP ESTONIA Cur IH ESTONIA IH ESTONIA % IH ESTONIA IH ESTONIA IH ESTONIA Cur GOV ESTONIA GOV ESTONIA % GOV ESTONIA GOV ESTONIA GOV ESTONIA Cur GFCF ESTONIA GFCF ESTONIA % GFCF ESTONIA GFCF ESTONIA GFCF ESTONIA Cur GDP FINLAND GDP FINLAND % GDP FINLAND GDP FINLAND GDP FINLAND Cur IH FINLAND IH FINLAND % IH FINLAND IH FINLAND IH FINLAND Cur GOV FINLAND GOV FINLAND % GOV FINLAND GOV FINLAND GOV FINLAND Cur GFCF FINLAND GFCF FINLAND % GFCF FINLAND GFCF FINLAND GFCF FINLAND Cur Table 1 4

6 GDP FRANCE GDP FRANCE % GDP FRANCE GDP FRANCE GDP FRANCE Cur IH FRANCE IH FRANCE % IH FRANCE IH FRANCE IH FRANCE Cur GOV FRANCE GOV FRANCE % GOV FRANCE GOV FRANCE GOV FRANCE Cur GFCF FRANCE GFCF FRANCE % GFCF FRANCE GFCF FRANCE GFCF FRANCE Cur GDP GERMANY GDP GERMANY % GDP GERMANY GDP GERMANY GDP GERMANY Cur IH GERMANY IH GERMANY % IH GERMANY IH GERMANY IH GERMANY Cur GOV GERMANY GOV GERMANY % GOV GERMANY GOV GERMANY GOV GERMANY Cur GFCF GERMANY GFCF GERMANY % GFCF GERMANY GFCF GERMANY GFCF GERMANY Cur GDP GREECE GDP GREECE % GDP GREECE GDP GREECE GDP GREECE Cur IH GREECE IH GREECE % IH GREECE IH GREECE IH GREECE Cur GOV GREECE GOV GREECE % GOV GREECE GOV GREECE GOV GREECE Cur GFCF GREECE GFCF GREECE % GFCF GREECE GFCF GREECE GFCF GREECE Cur GDP HUNGARY GDP HUNGARY % GDP HUNGARY GDP HUNGARY GDP HUNGARY Cur IH HUNGARY IH HUNGARY % IH HUNGARY IH HUNGARY IH HUNGARY Cur GOV HUNGARY GOV HUNGARY % GOV HUNGARY GOV HUNGARY GOV HUNGARY Cur GFCF HUNGARY GFCF HUNGARY % GFCF HUNGARY GFCF HUNGARY GFCF HUNGARY Cur Table 1 5

7 GDP ICELAND GDP ICELAND % GDP ICELAND GDP ICELAND GDP ICELAND Cur IH ICELAND IH ICELAND % IH ICELAND IH ICELAND IH ICELAND Cur GOV ICELAND GOV ICELAND % GOV ICELAND GOV ICELAND GOV ICELAND Cur GFCF ICELAND GFCF ICELAND % GFCF ICELAND GFCF ICELAND GFCF ICELAND Cur GDP IRELAND GDP IRELAND % GDP IRELAND GDP IRELAND GDP IRELAND Cur IH IRELAND IH IRELAND % IH IRELAND IH IRELAND IH IRELAND Cur GOV IRELAND GOV IRELAND % GOV IRELAND GOV IRELAND GOV IRELAND Cur GFCF IRELAND GFCF IRELAND % GFCF IRELAND GFCF IRELAND GFCF IRELAND Cur GDP ISRAEL GDP ISRAEL % GDP ISRAEL GDP ISRAEL GDP ISRAEL Cur IH ISRAEL IH ISRAEL % IH ISRAEL IH ISRAEL IH ISRAEL Cur GOV ISRAEL GOV ISRAEL % GOV ISRAEL GOV ISRAEL GOV ISRAEL Cur GFCF ISRAEL GFCF ISRAEL % GFCF ISRAEL GFCF ISRAEL GFCF ISRAEL Cur GDP ITALY GDP ITALY % GDP ITALY GDP ITALY GDP ITALY Cur IH ITALY IH ITALY % IH ITALY IH ITALY IH ITALY Cur GOV ITALY GOV ITALY % GOV ITALY GOV ITALY GOV ITALY Cur GFCF ITALY GFCF ITALY % GFCF ITALY GFCF ITALY GFCF ITALY Cur Table 1 6

8 GDP JAPAN GDP JAPAN % GDP JAPAN GDP JAPAN GDP JAPAN Cur IH JAPAN IH JAPAN % IH JAPAN IH JAPAN IH JAPAN Cur GOV JAPAN GOV JAPAN % GOV JAPAN GOV JAPAN GOV JAPAN Cur GFCF JAPAN GFCF JAPAN % GFCF JAPAN GFCF JAPAN GFCF JAPAN Cur GDP KOREA GDP KOREA % GDP KOREA GDP KOREA GDP KOREA Cur IH KOREA IH KOREA % IH KOREA IH KOREA IH KOREA Cur GOV KOREA GOV KOREA % GOV KOREA GOV KOREA GOV KOREA Cur GFCF KOREA GFCF KOREA % GFCF KOREA GFCF KOREA GFCF KOREA Cur GDP LUXEMBOURG GDP LUXEMBOURG % GDP LUXEMBOURG GDP LUXEMBOURG GDP LUXEMBOURG Cur IH LUXEMBOURG IH LUXEMBOURG % IH LUXEMBOURG IH LUXEMBOURG IH LUXEMBOURG Cur GOV LUXEMBOURG GOV LUXEMBOURG % GOV LUXEMBOURG GOV LUXEMBOURG GOV LUXEMBOURG Cur GFCF LUXEMBOURG GFCF LUXEMBOURG % GFCF LUXEMBOURG GFCF LUXEMBOURG GFCF LUXEMBOURG Cur GDP MEXICO GDP MEXICO % GDP MEXICO GDP MEXICO GDP MEXICO Cur IH MEXICO IH MEXICO % IH MEXICO IH MEXICO IH MEXICO Cur GOV MEXICO GOV MEXICO % GOV MEXICO GOV MEXICO GOV MEXICO Cur GFCF MEXICO GFCF MEXICO % GFCF MEXICO GFCF MEXICO GFCF MEXICO Cur Table 1 7

9 GDP NETHERLANDS GDP NETHERLANDS % GDP NETHERLANDS GDP NETHERLANDS GDP NETHERLANDS Cur IH NETHERLANDS IH NETHERLANDS % IH NETHERLANDS IH NETHERLANDS IH NETHERLANDS Cur GOV NETHERLANDS GOV NETHERLANDS % GOV NETHERLANDS GOV NETHERLANDS GOV NETHERLANDS Cur GFCF NETHERLANDS GFCF NETHERLANDS % GFCF NETHERLANDS GFCF NETHERLANDS GFCF NETHERLANDS Cur GDP NEW ZEALAND GDP NEW ZEALAND % GDP NEW ZEALAND GDP NEW ZEALAND GDP NEW ZEALAND Cur IH NEW ZEALAND IH NEW ZEALAND % IH NEW ZEALAND IH NEW ZEALAND IH NEW ZEALAND Cur GOV NEW ZEALAND GOV NEW ZEALAND % GOV NEW ZEALAND GOV NEW ZEALAND GOV NEW ZEALAND Cur GFCF NEW ZEALAND GFCF NEW ZEALAND % GFCF NEW ZEALAND GFCF NEW ZEALAND GFCF NEW ZEALAND Cur GDP NORWAY GDP NORWAY % GDP NORWAY GDP NORWAY GDP NORWAY Cur IH NORWAY IH NORWAY % IH NORWAY IH NORWAY IH NORWAY Cur GOV NORWAY GOV NORWAY % GOV NORWAY GOV NORWAY GOV NORWAY Cur GFCF NORWAY GFCF NORWAY % GFCF NORWAY GFCF NORWAY GFCF NORWAY Cur GDP OECD GDP OECD GDP OECD GDP OECD GDP OECD Cur IH OECD IH OECD IH OECD IH OECD IH OECD Cur GOV OECD GOV OECD GOV OECD GOV OECD GOV OECD Cur GFCF OECD GFCF OECD GFCF OECD GFCF OECD GFCF OECD Cur Table 1 8

10 GDP POLAND GDP POLAND % GDP POLAND GDP POLAND GDP POLAND Cur IH POLAND IH POLAND % IH POLAND IH POLAND IH POLAND Cur GOV POLAND GOV POLAND % GOV POLAND GOV POLAND GOV POLAND Cur GFCF POLAND GFCF POLAND % GFCF POLAND GFCF POLAND GFCF POLAND Cur GDP PORTUGAL GDP PORTUGAL % GDP PORTUGAL GDP PORTUGAL GDP PORTUGAL Cur IH PORTUGAL IH PORTUGAL % IH PORTUGAL IH PORTUGAL IH PORTUGAL Cur GOV PORTUGAL GOV PORTUGAL % GOV PORTUGAL GOV PORTUGAL GOV PORTUGAL Cur GFCF PORTUGAL GFCF PORTUGAL % GFCF PORTUGAL GFCF PORTUGAL GFCF PORTUGAL Cur GDP RUSSIA GDP RUSSIA % GDP RUSSIA GDP RUSSIA GDP RUSSIA Cur IH RUSSIA IH RUSSIA % IH RUSSIA IH RUSSIA IH RUSSIA Cur GOV RUSSIA GOV RUSSIA % GOV RUSSIA GOV RUSSIA GOV RUSSIA Cur GFCF RUSSIA GFCF RUSSIA % GFCF RUSSIA GFCF RUSSIA GFCF RUSSIA Cur GDP SLOVAK REPUBLIC GDP SLOVAK REPUBLIC % GDP SLOVAK REPUBLIC GDP SLOVAK REPUBLIC GDP SLOVAK REPUBLIC Cur IH SLOVAK REPUBLIC IH SLOVAK REPUBLIC % IH SLOVAK REPUBLIC IH SLOVAK REPUBLIC IH SLOVAK REPUBLIC Cur GOV SLOVAK REPUBLIC GOV SLOVAK REPUBLIC % GOV SLOVAK REPUBLIC GOV SLOVAK REPUBLIC GOV SLOVAK REPUBLIC Cur GFCF SLOVAK REPUBLIC GFCF SLOVAK REPUBLIC % GFCF SLOVAK REPUBLIC GFCF SLOVAK REPUBLIC GFCF SLOVAK REPUBLIC Cur Table 1 9

11 GDP SLOVENIA GDP SLOVENIA % GDP SLOVENIA GDP SLOVENIA GDP SLOVENIA Cur IH SLOVENIA IH SLOVENIA % IH SLOVENIA IH SLOVENIA IH SLOVENIA Cur GOV SLOVENIA GOV SLOVENIA % GOV SLOVENIA GOV SLOVENIA GOV SLOVENIA Cur GFCF SLOVENIA GFCF SLOVENIA % GFCF SLOVENIA GFCF SLOVENIA GFCF SLOVENIA Cur GDP SPAIN GDP SPAIN % GDP SPAIN GDP SPAIN GDP SPAIN Cur IH SPAIN IH SPAIN % IH SPAIN IH SPAIN IH SPAIN Cur GOV SPAIN GOV SPAIN % GOV SPAIN GOV SPAIN GOV SPAIN Cur GFCF SPAIN GFCF SPAIN % GFCF SPAIN GFCF SPAIN GFCF SPAIN Cur GDP SWEDEN GDP SWEDEN % GDP SWEDEN GDP SWEDEN GDP SWEDEN Cur IH SWEDEN IH SWEDEN % IH SWEDEN IH SWEDEN IH SWEDEN Cur GOV SWEDEN GOV SWEDEN % GOV SWEDEN GOV SWEDEN GOV SWEDEN Cur GFCF SWEDEN GFCF SWEDEN % GFCF SWEDEN GFCF SWEDEN GFCF SWEDEN Cur GDP SWITZERLAND GDP SWITZERLAND % GDP SWITZERLAND GDP SWITZERLAND GDP SWITZERLAND Cur IH SWITZERLAND IH SWITZERLAND % IH SWITZERLAND IH SWITZERLAND IH SWITZERLAND Cur GOV SWITZERLAND GOV SWITZERLAND % GOV SWITZERLAND GOV SWITZERLAND GOV SWITZERLAND Cur GFCF SWITZERLAND GFCF SWITZERLAND % GFCF SWITZERLAND GFCF SWITZERLAND GFCF SWITZERLAND Cur Table 1 10

12 GDP TURKEY GDP TURKEY % GDP TURKEY GDP TURKEY GDP TURKEY Cur IH TURKEY IH TURKEY % IH TURKEY IH TURKEY IH TURKEY Cur GOV TURKEY GOV TURKEY % GOV TURKEY GOV TURKEY GOV TURKEY Cur GFCF TURKEY GFCF TURKEY % GFCF TURKEY GFCF TURKEY GFCF TURKEY Cur GDP UNITED KINGDOM GDP UNITED KINGDOM % GDP UNITED KINGDOM GDP UNITED KINGDOM GDP UNITED KINGDOM Cur IH UNITED KINGDOM IH UNITED KINGDOM % IH UNITED KINGDOM IH UNITED KINGDOM IH UNITED KINGDOM Cur GOV UNITED KINGDOM GOV UNITED KINGDOM % GOV UNITED KINGDOM GOV UNITED KINGDOM GOV UNITED KINGDOM Cur GFCF UNITED KINGDOM GFCF UNITED KINGDOM % GFCF UNITED KINGDOM GFCF UNITED KINGDOM GFCF UNITED KINGDOM Cur GDP UNITED STATES GDP UNITED STATES % GDP UNITED STATES GDP UNITED STATES GDP UNITED STATES Cur IH UNITED STATES IH UNITED STATES % IH UNITED STATES IH UNITED STATES IH UNITED STATES Cur GOV UNITED STATES GOV UNITED STATES % GOV UNITED STATES GOV UNITED STATES GOV UNITED STATES Cur GFCF UNITED STATES GFCF UNITED STATES % GFCF UNITED STATES GFCF UNITED STATES GFCF UNITED STATES Cur Table 1 11