Quaranta table

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The Quaranta table is a validation table used during PPP calculation. The table groups results by item or basic heading.

History

The table was first proposed by Vincenzo Quaranta for use in the European PPP program in 1990.[1]

Validation type

The Quaranta table computes various statistics of the data and to see if any of these are outside some safe range. Therefore it performs a logical/deductive validation. It does not require collecting new data or keeping a separate dataset for use in validation.

Validation process

[1]:3, 4

  • Comparison of average prices
    • Exchange rate ratios
    • PPP ratios
    • Price Level Index
  • Price variation
    • Variation in PPP ratios for a basic heading
    • Variation in a country's PPP ratios for a basic heading
    • Variation in PPP ratios for an item
    • Variation in price observations
However, it must be remembered that the principal reason for calculating PPPs is the fact that when the prices of a given product are converted into a common currency unit using exchange rates, they are not in fact equal in all countries. The general leve l of prices tends to be systematically higher or lower in some countries than in others. Thus, a high or low XR price for an individual item in one country may be largely due to the fact that the general price level for that country is high or low when exc hange rates are used. It may not signal any abnormality in that particular price. For this reason, XR price ratios are less useful than PPP price ratios for validation purposes.[1]:9

Usage

Quaranta tables have been used in OECD-Eurostat regional comparisons.[2]:28

See also

External links

References

  1. 1.0 1.1 1.2 "Validation Tables (Draft version)" (PDF). International Comparison Program. 2011. Archived (PDF) from the original on November 10, 2017. Retrieved November 10, 2017. 
  2. D. S. Prasada Rao (2011). "Measuring the Size of the World Economy - Chapter 1: The Framework of the International Comparison Program" (PDF). Retrieved November 10, 2017.