valid_PPPratio() in OECDsppps calculates the PPP-ratio, which shows the variation
coefficient representing variability across products and across country-regions;
see World Bank (2013), ICP (2021) and European Union/OECD et al. (2024)
.
Usage
valid_PPPratio(
data,
year = "Year",
product_code = "Product code",
region = "Region",
average_price = "Average price of product"
)Arguments
- data
A data frame or tibble containing at least a column with the average country-region prices and a region and product identifier.
- year
Year
- product_code
Product code identifier
- region
Identifier for regions (within or across countries)
- average_price
Average country-region prices of the individual item-level price quotes. Correspond to the "Average price of product" obtained in
valid_apt()
Details
The country variation coefficient (row measure) represents the standard deviation of product PPPs within country-regions, thereby identifying countries exhibiting the greatest price variability. Conversely, the product variation coefficient (column measure) represents the standard deviation of PPP-ratios across country-regions, highlighting products with the most significant cross-country variation.
The PPP-ratio uses the PPP-converted prices to calculate the standardised price ratio (SPR) For product \(1\) and country–region \(A\), the SPR is defined as: \[SPR_{1A} = \mu^*_{1A} / \left( \prod_{n = A,\dots, N} \mu^*_{1n} \right)^{\frac{1}{N}} \times 100\] where \(\mu^{*}_{1A}\) represents the average converted price of product \(1\) in country–region \(A\), and \(N\) is the total number of country–regions.
References
European Union/OECD, Hearne D, Bailey D (2024).
Eurostat-OECD Methodological Manual on Purchasing Power Parities (2023 Edition), volume 12(1).
OECD Publishing, Paris.
doi:10.2785/384854
, https://doi.org/10.1080/21681376.2025.2475115.
ICP (2021).
“A Guide to the Compilation of Subnational Purchasing Power Parities (PPPs).”
International Comparison Program.
https://thedocs.worldbank.org/en/doc/5064f2288436664bc8f9811c8a5b8c55-0050022021/original/Guide-Subnational-PPPs.pdf.
World Bank (2013).
Measuring the Real Size of the World Economy: The Framework, Methodology, and Results of the International Comparison Program — ICP.
World Bank.
doi:10.1596/978-0-8213-9728-2
.