Back Again

I am back again with the promise of regular updates starting with a good news. After a very lengthy process, this paper joint with Prasada Rao is officially accepted for publication in the Journal of Econometrics.The paper develops a method of moment approach for estimation of PPPs based on the CPD model. The feature of the approach is that it unifies the stochastic approach to major PPP  index numbers. This paper provides the basic theory, in our next paper we are planning to enhance the approach to provide more realistic standard errors. Here is the abstract:

The paper presents a stochastic approach based on the country-product-dummy (CPD) method to the computation of purchasing power parities (PPPs) in the International Comparison Program. The approach develops estimation strategies in conjunction with the country-product-dummy method to derive a range of multilateral index number methods for the compilation of PPPs at the basic heading level as well as at higher levels of aggregation. At the basic heading level our approach generates Jevons geometric index, arithmetic and harmonic indexes as well as the Dutot index. At higher levels of aggregation, a weighted stochastic model with alternative stochastic specifications and the method of moments (MOM) are used to derive the Geary-Khamis, Iklé, Rao and other multilateral index number methods employed in international comparisons. Expressions for computing standard errors for PPPs based on these formulae are also derived. Existence of solutions to the estimating equations derived from the weighted method of moments or the maximum weighted likelihood is also discussed. A numerical illustration based on ICP 2005 data is presented.

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2 responses to this post.

  1. Posted by Sriram on November 23, 2015 at 11:00 am

    Congrats Reza.

    Reply

  2. Posted by Reza on November 23, 2015 at 12:15 pm

    Thanks Shriram

    Reply

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