Basic heading

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In the context of the International Comparison Program (ICP), a basic heading is "the lowest level of aggregation within the national accounts at which the expenditure and expenditure share data are available". In the ICP goods aggregation hierarchy, it is just one level above items. In the ICP hierarchy, the level above basic headings are classes.[1]

The ICP uses a pyramid structure similar to that used in the standard CPI compilation. Starting with a list of products, the prices of goods and services are aggregated into basic headings. These basic headings are identified on the basis of standard sample survey principles underlying the identification of strata in a stratified sampling framework. The basic headings consist of all the items which have a low dispersion of price ratios. They therefore provide reliable estimates of PPPs for the basic heading level.

The basic heading level is the lowest level aggregate for which expenditure data are available. Since PPPs at the basic heading level are computed without weights for individual products, the basic heading level may be considered to be similar to the elementary level used in CPI construction. The basic heading level PPPs, measuring price level differences for all the products included in the listing, are then aggregated to provide PPPs for various sub-aggregates, which are further aggregated to result in PPPs at the GDP level. The mechanism of deriving PPPs can differ depending upon the aggregation procedure used.[2]

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References

  1. 1.0 1.1 D. S. Prasada Rao. "The Framework of the International Comparison Program" (PDF). International Comparison Program. Retrieved October 27, 2017. 
  2. "2424597.pdf" (PDF). Retrieved October 28, 2017. 
  3. "04_ICPBook_ComputationBHPPPs_Final.pdf" (PDF). Retrieved October 27, 2017.