1. Maximizing synergies in regional and global post-2011 activities Requirements and challenges for linking regional PPP updates 2 nd Regional Coordinating Agencies meeting May 27-29, 2015 Washington, DC

2. DEVELOP FRAMEWORK AND PROCESS for UPDATING GLOBAL PPPs FREQUENTLY by LEVERAGING ON REGIONAL POST-2011 ACTIVITIES CURRENT EXTRAPOLATION METHODS ARE SUB-OPTIMAL PREVIOUS REGIONAL UPDATES WERE NOT INCORPORATED INTO GLOBAL ESTIMATES Background/Motivation

3. Recap: (2011) Benchmark data requirements DATA CATEGORYLEVEL Price data for all GDP componentsItem level Regional PPPsBasic heading level (155) National account expendituresBasic heading level (155) Exchange ratesPer country PopulationPer country SURVEYDATA Household ConsumptionGlobal core list prices (600+) HousingHousing rentals (64) and volume Private EducationGlobal core list prices (7) Government compensationCompensation for occupations (37) Machinery and equipmentGlobal core list prices (170+) ConstructionGlobal core list prices (50+)

4. Options for updating global PPPs Extrapolation Regional prices extrapolated using price indices and deflators Regional PPP calculated for full or reduced classification Global linking factors calculated based on extrapolated prices Global PPPs calculated based on extrapolated linking factors and regional PPPs (GEKS + CAR-procedure) Price surveys Regions conduct price surveys for full or reduced lists Regional PPP calculated for full or reduced classification Global linking factors calculated based on survey prices Global PPPs calculated based on extrapolated linking factors and regional PPPs (GEKS + CAR-procedure) Combination Selected GDP components OR years OR countries are extrapolated Price surveys are conducted for selected GDP components OR years OR countries Other price data sources?

5. …Challenges with extrapolation approach Consumer price index – Required at most detailed level possible; 13 COICOP categories may be most widely available Rental price index, producer price index and construction cost index GDP deflators Availability and reliability of extrapolation indices Reliable extrapolation can be challenging for non-household consumption components, especially: – Government compensation (note: pay scales can be obtained “easily”) – Housing (note: at least housing volume data should be available “readily”) “Extrapolation-resistant areas”

6. …Challenges with survey approach Updates and revisions of item lists are inevitable Survey frames and data quality may vary Ensuring sufficient comparability with the 2011 benchmark Protocols and approaches need to be established – For regional and global processes Establishing process for price data validation and reporting Number of regions updating results may vary Timing of regional updates may vary Country participation may vary Ensuring sufficient comparability within and between the regions

7. …Challenges with combination approach Countries and regions extrapolating vs. surveying price data – Updates and revisions of item lists are inevitable Ensuring comparability across time and space Incorporation of possible “other” price data into regional estimates Using possible other price data sources

8. Other challenges Synchronizing activities and approaches with ongoing Eurostat- OECD PPP program Linking CIS 2014 PPP exercise (via OECD-Russia?) Extrapolating results for singletons (country pairs?) Changes in country participation in regional updates Region and country participation Productivity adjustment for government compensation – Use 2011 factors, or calculate new set of factors for “update” years? Calculation of global PPPs for education Calculation of global PPPs for housing Challenges with specific surveys

9. Timeline ICP 2011 2012 2013 2014 2015 update Combination approach? Future to be decided by UNSC 2016 2017 ICP 2018? We’re here

10. Summary Global core list price data – Household consumption and special surveys (incl. housing volume) – Regional extrapolation indices National account expenditures – At desired classification level Regional PPPs – At desired classification level Population and exchange rate data Global data needs for non-benchmark years Regional agencies Updating global PPPs IS POSSIBLE …with strong partnerships …and with established work program and processes