Methodology - Purchasing power parities


Eurostat-OECD Methodological manual on purchasing power parities

Eurostat, the OECD and 47 participating countries work together in establishing purchasing power parities, or PPPs, in order to compare the price and volume levels of the GDPs. This programme is called the Eurostat-OECD PPP Programme. The Methodological Manual, 2012 edition, gives a complete, detailed and up-to-date description of the functioning of the programme. This includes its organisation, the various surveys carried out by participating countries and the ways PPPs are calculated and disseminated. It also provides guidance on the use of PPPs.

The electronic version of the manual can be found  here.

Reference metadata

The concept of PPPs, the methodology behind them, their release policy and their quality are also described in the  reference metadata.

PPP product list for consumer goods and services

PPPs are calculated on the basis of prices for comparable and representative products, collected by all participating countries. The list of products used in the 2018-2020 cycle of price surveys for consumer goods and services can be found  here.

New methodology on health and hospital-specific price comparison

Health services account for a large and increasing share of production and expenditure in OECD and Eurostat countries but there are also noticeable differences between countries in expenditure per capita. Whether such differences are due to more services being consumed or whether they reflect differences in the price of services is a question of significant policy relevance.

Health and hospital-specific price comparisons turn out to be quite different from the comparisons based on the input method or on economy-wide price ratios and consequently lead to different conclusions about the volume of health services consumed per person.

Therefore, as from November 2013 a new methodology has become an integral part of the Eurostat/OECD Purchasing Power Parity comparison. It moves away from the traditional input perspective, thereby relaxing the assumption that hospital productivity is the same across countries.

The following  paper describes the new methodology and presents the results of the joint effort between OECD and Eurostat in developing price comparisons for health goods and services.

See also