1. Discussion by Luigi Biggeri PPP-based Stratification
University of Florence, Italy
Discussion by Luigi Biggeri
of the paper
PPP-based Stratification
of CIS–EU/OECD Economies
Andrey E. Kosarev
IARIW / HSE conference
“Experiences and Future Challenges in Measuring Income and Wealth in CIS Countries and Eastern Europe”
Moscow
17-18 September 2019

2. Very good paper : Interesting both for the Topic and the Results Obtained
Aims
Stratification of 54 quite diversified countries (CIS –EU/OECD) to obtain more structurally homogeneous subgroups of countries to better predict the effects on some endogenous indicators of the :
economic policy
increase of GDPpc on possible systemic effects of the economic policy measures
Check the validity of the stratification obtained in terms:
Harrod-Balassa-Samuelson effect (correlation between PLI and GDPpc)
Engel’s law (effect of the increase of GDPpc on the proportion of income spent for different goods and services)

3. Strengths of the paper
Data set used: very good
The ICP produced PPPs and comparable data of GDP and its components in 2005, 2011 and now is in progress the computation for 2017
CIS-STAT computed those data also for 2014 and held negotiations with OECD and Eurostat and achieved an agreement to links CIS and EU/OECD data at BH level to obtain a separate regional comparison of PPPs and GDP for the 54 countries
Methods used: adequate to the objectives
Partially –multilateral comparison (PMC procedure) to obtain a methodologically harmonized set of PPPs to the US $
Methods for assessing the similarity of economic structure of the countries
tendency-homogeneous. Analysis of a cross section scatter plots, and use of linear approximation
A special “moving linear segment” procedure (MLS procedure) for identifying “Structural break points”

4. Results
Allow to sub-selecting three tendency homogeneous groups
Weaker economies (low-income countries), mid-level economies (medium-income countries) and the most powerful economies (high-income countries)
Validity of the stratification obtained in terms of Harrod-Balassa-Samuelson effect and Engel’s law is confirmed (at least in general)
Few observations
The sub-division in the first two groups seems robust to different indicators used. But this do not happened for the third group of countries
The similarity in respect to the regression angles ok, but
The results depend on the indicators used and on the change in the key indicator
R and R2 are in many cases too small for good prediction of the effects
In the figures it is necessary to put the labels to better identify each country

5. Prospects and future works
Useful tool of analysis, to be used for a broader analysis; for practical solutions, it is not necessary to use very detailed categories
Replicability of the experiment:
CIS will repeats it on the basis of 2017 data that is in production
Need to extend the analyses separately for more detailed component of GDP to:
take into account the different structure of GDP
Considering that the PLI of the sub-components are different from the general PLI for GDP and are different in each country
Some sub-components of GDP (such as construction, and machinery) are more important than other to implement the development economic policies
The experiment could be extended to other groups of countries that belong to ICP comparison