This is an addition to The Impact of International Price Discrepancies on PPP-adjusted GDP and expands on material in Estimating Production and Income Across Nations: Reconciling the Differences: the New Zealand Experience .

Keywords: Statistics;

While the nominal output of an economy, usually called ‘Gross Domestic Product’ or GDP is exactly the same whether it is measured by what is produced or how it is disposed – on the production side or the expenditure side of the economy. This occurs because the incomes the expenditure generates exactly matches the outlays (including investments) the incomes finance. However this mathematical congruency does not apply when a different set of prices is applied to the production and expenditure sides of an open economy, even if the prices are consistent. The difference arises because the goods and services consumed in an open economy differ from that which is produced because some of the domestic production is exchanged for foreign production, that is it is exported to in exchange for imports. The ratio of the exchange values can vary, and that leads to the difference when, for instance, constant price GDP estimates are made over time. This exchange ratio can be measured as the ration of export prices over import prices. Note that the exchange rate does not directly influence the terms of trade ratio, providing the prices are measured either in the local currency or the international currency.

Keywords: Statistics;

Introduction

It is an elementary truism of economics that Gross Domestic Product can be measured on the production side (that is in terms of the products of firms) and the expenditure side (that is in terms of the final purchases of the products) and the two aggregates are exactly equal to one another (although in practice there will be a measurement error, called the ‘statistical discrepancy’).

MEASURING PPP-ADJUSTED GDP (INDEX)
This is the index of a series of papers concerned with PPP measures. The papers are in varying presentational styles and also reflects my growing understanding of the issues involved, and my improving presentation of them.

Keywords: Statistics;

The Reserve Bank of New Zealand Inflation Calculator and earlier

Keywords: Statistics;

As a part of its statutory responsibility for price stability, the Reserve Bank of New Zealand has provided a web based ‘Inflation Calculator’. Historians will find it useful to convert an earlier price into a current one, thus giving readers a better sense of the significance of a historical value.

This is the second of a series of papers concerned with PPP measures. The papers are in varying presentational styles and also reflect my growing understanding of the issues involved, and my improving presentation of them.See Measuring PPP-adjusted GDP Index for the other papers. This paper, written in December 2003, is an exposition based on tabulations.

Keywords: Statistics;

This is the first of a series of papers concerned with PPP measures. The papers are in varying presentational styles and also reflects may growing understanding of the issues involved, and my improving presentation of them.See Measuring PPP-adjusted GDP Index for the other papers. This paper, written in September 2003, is a simple mathematical exposition.

Keywords: Statistics;

This paper is presents a simple proposition:

Where the international prices of exported goods are less than the purchasing power parity prices of the same consumption goods the purchasing power parity adjusted GDP measured on the production side will be less than the purchasing power parity adjusted GDP measured on the expenditure side for those countries which are net exporters of the good.

From Chapter 6 of The Economic and Health Status of Households by Brian Easton and Suzie Ballantyne.

Keywords: Statistics;

The authors would like to acknowledge the significant contribution of Claudio Michelini to the development of empirically based equivalence scales in New Zealand, the topic of this chapter. Claudio had worked on the underlying theory (the preference-consistent Extended Linear Expenditure System) as a part of his postgraduate work at the University of Bristol. But in those days the computing power was insufficient to cope with the non-linear estimation that (ironically) the linear theory required.