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Expert Group Meeting on Price Statistics and National Accounts: ICP Round 2011 Jointly organized by: UN-ECLAC, CARICOM, CARTAC and ECCB 27th-30th August 2012 Aruba

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Summary INTRA country data validation INTER country data validation Quaranta Tables Dikanov Tables Case Study

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Data validation procedure The data validation procedure has two main steps: INTRA country validation INTER country validation Countries and ECLAC participate in this procedure It is an iterative process

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The Quaranta Tables The main data analysis within inter-country and global validation is carried out by using two validation tables that are Screen the national average prices for possible errors by comparing the average prices for the same product in different countries The purpose of the both tables is to Step 2: INTER country validation The Dikhanov Tables Editing of price data for an item This analysis can lead to Editing of metadata for an item Possible errors are highlighted by special indices

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Summary tables for each BH The Quaranta Tables (QTs) consist of a set of tables BH PPPs and PLIs QTs can be used for the validation of Quanranta Tables validation tables Individual tables for each item EKS, EKS*, CPD, CPRD and W-CPD Different calculation options Recommended method by the TAG is weighted CPD Item XR-ratios and PPP-ratios However comparison of results for different calculation methods can be used to value given information on importance Table details

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QUARANTA TABLE DIAGNOSTICS - Rice Data Selection Criteria Basic Heading Code99.11.01.11.1Time PeriodYearly Run Date4/13/2011 Averaging MethodArithmetic MeanImputationCPD Summary Information No of Items included in the Analysis6 out of 6 Average weight of Basic Heading in Total Expenditure0.0 No of Countries included in the Analysis18 out of 18Average Coefficient Variation27.4 Base CountryUSA Country Level Details # Shares are multiplied by 10000. CountryXRPPPPLI(%)Weight #ItemsVar.Co. Country 14.421.815041.080%0.02;*07.2 Counrty 2959.04718.277074.896%0.05;*08.2 Counrty 31018.352.76960.272%0.02;*033.8 Item Level Details 99.11.01. 11.1.01Long grain rice, prepacked Var.Co. :25.91-Kilograms CountryNC-Price Quotati onsVar.Co.XR-prXR-ratio PPP- price PPP- ratioPref. UoM Country 11.50015111.20.3445.890.8395.02NA Country 2-------NA Country 3766.381103.072.939857.611.14130.66NA Table details BH table Item table

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Table details Quaranta tables # Basic Heading Code Period Period during which the prices for the products covered by the Table were collected. Run dateRun date for the tables Averaging Method Method used to calculate the averages ImputationMethod used to calculate the basic heading PPPs EKS, EKS*, CPD or CPDR. #Number of Items included in the analysis Weight National expenditure weights scaled to 100,000. That part of a country's GDP that is spent on the basic heading when both expenditures are expressed in national currency and valued at national price levels. For information only: not used in the calculations #Number of Countries included in the analysis Average Coefficient Variation Overall variation coefficient i.e. the average product variation coefficient for the products priced for the basic heading. It is calculated as the unweighted arithmetic mean of the product variation coefficients at. It measures the average variation of the PPP-Ratios of all products priced for the basic heading. Base CountryBase country for the calculations (currency selected as numéraire).

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BH table details CountryNames of countries covered by the Table. XR Market exchange rates of the countries expressed as the number of units of national currency per unit of the numéraire currency (base country). PPP Purchasing power parities for the basic heading calculated and expressed as the number of units of national currency per unit of the selected numéraire currency. The prices used to calculate the PPPs are the average prices in national currencies that countries report for the products they priced for the basic heading - that is, the NC-Prices. PLI Price Level Indices. The PPPs expressed as a percentage of the corresponding exchange rate. Weight National expenditure weights scaled to 100,000. That part of a country's GDP that is spent on the basic heading when both expenditures are expressed in national currency and valued at national price levels. No. of Items Number of products that are priced by each country for the basis heading and the number of products priced by each country that are important - that is, the number of products assigned an asterisk (*). Var.Co. Country variation coefficient. The standard deviation of the country's CUP-Ratios for all products priced by the country for the basic heading expressed as a percentage of the arithmetic mean of the country's CUP-Ratios for all products priced by the country for the basic heading. BH Table details Quaranta tables

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Item table details Quaranta tables Item table details CodeCode, name, and summary definition of the product covered in the subsequent product section. Var.Co. Item variation coefficient. The standard deviation of the product's PPP-Ratios expressed as a percentage of the arithmetic mean of the product's PPP-Ratios. Pref. UoMUnit of measurement CountryCountry name NC-PriceAverage price in national currency (NC). QuotationsNumber of price observations on which the average prices in national currency are based. Var.Co. Price observation variation coefficient. The standard deviation of the price observations underlying the product's average price expressed as a percentage of the arithmetic mean of the price observations underlying the product's average price. XR-Price The average prices in national currency in column [24] converted to the numéraire currency with the exchange rates. XR-Ratio Standardized price ratios based on the exchange rate converted prices. The XR-Prices expressed as a percentage of their geometric mean. PPP-PriceThe average prices in national currency converted to the numéraire currency with the PPPs. PPP-Ratio Standardized price ratios based on the PPP converted prices. The PPP-Prices expressed as a percentage of their geometric mean. Geo MeanGeometric mean of the exchange rate converted prices and CUP-Prices

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PPP Price: It is the national average price for a specific product of a specific country deflated by PPP. This price indicates how many units of currency of the base country are needed to buy the same quantity of a specific product that are bought with one unit of currency of the base country in the base country. Since PPP are calculated based on all the products that made up the BH, the PPP price indicates how a product behaves in a specific country with respect to other products in the same country.

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PPP ratio is the PPP price divided by the geometric mean of PPP prices in all the countries. The value of this ratio indicates how the country behaves in comparison with other countries for a specific product. That is to say, how the price behaves relative to the other products of the country in the BH and relative to the rest of the countries for the same product. The average of all the PPP ratios for a specific country is 1 (or 100%) inside a BH, and at the same time, the average of PPP ratios for all the countries for a specific product is 100%

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Suggested critical values: CV larger than 33% Ratios outside (80% - 125%) range. With this tool one can detect problems with the quality of data such as: High price variation for a certain product in each country. Average prices which are too high (or low) in nominal terms compared to the price in other countries when converted with exchange rate. Average prices which are too high (or low) in real terms compared to the price in other countries when converted with PPP Behavior of average prices inside a BH. For instance when the prices for the majority of the products in a specific BH for a specific country are below (above) the regional average and for a certain product the price is above (below) regional average.

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Summary table for each BH As the QTs, the Dikhanov Tables (DTs) consist of a set of tables Aggregated (above BH) and BH PPPs and PLIs DTs can be used for the validation of Dikhanov Tables validation tables Individual tables or rows for each item CPD, CPRD, CPD-W Different calculation options Item XR-Ratios and CPD(R) residuals Table details Aggregate/BH tables + full item statistics Different lay-out options including color scheme Aggregate of BH tables + simple residual rows for item

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DT can be used as a substitute or complement of QT in order to detect potential problems with the data. QT analyse one BH at a time. For certain products it is difficult to detect outliers with QT (biased averages due to lack of countries collecting data for a specific product) The main difference between QT and DT is that the analysis in DT does not consider data grouped by BH but it considers them individually and simultaneously. This makes easier the analyses for those products which are the only representative of a BH or when there are a few products in a BH.

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Overview Dikhanov tables Table details BH table Item table Dikhanov Temporal AnalysisCountry1Country2Country3 Yearly - 2005 PPP 2.934690064658.12899764.040426119 STD 0.2452374310.2560061280.291549487 No.of Priced Items 420513572 ER (LCU/US$) 2.43527.475.78 Rebased_XR 4.418181818959.036363610.50909091 PLI 0.6642302610.6862398780.384469613 Item Level DetailsCountry1Country2Country3 Item CodeItem Name Yearly - 2005 99.11.01.11.1Rice PPP 1.81507718.2974.84856 STD 0.051090.07269940.274263 PLI 0.4108190.7489780.461368 No.of Priced Items 256 99.11.01.11. 1.01Long grain rice, prepacked -0.05109 - 0.26746 Average Price 1.5-5.51 No.of Observations 151-10 Coefficient of Variation 11.2214-3 XR Ratio 70.4386-108.78

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Table Details PPP Purchasing power parities for the basic heading or aggregate covered by the Table. They are expressed as the number of local currency units per unit of the selected numéraire currency. The prices used to calculate the PPPs are the average prices in local currencies that countries report for the products they priced for the basic heading or aggregate - that is the average prices. STD Standard deviation of each country’s CPD or CPRD residuals for the basic heading or aggregate. It can be converted to a country variation coefficient by multiplying by 100. #Number of products specified for the basic heading or aggregate. ER (LCU/US$) Market exchange rates of countries expressed as the number of local currency units per US dollar. Rebased XR Exchange rates rebased to the numéraire currency. Number of local currency units per unit of numéraire currency. PLI Price level indices. The PPPs expressed as a ratio of the corresponding rebased exchange rates in row. Table details Dikhanov tables

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BH details Dikhanov tables BH Details Item codeCode of the basic heading or aggregate covered by the Table. Item nameName of the basic heading or aggregate covered by the Table. Period Period during which the prices for the products covered by the Table were collected. PPP Purchasing power parities for the basic heading or aggregate covered by the Table. They are expressed as the number of local currency units per unit of the selected numéraire currency. The prices used to calculate the PPPs are the average prices in local currencies that countries report for the products they priced for the basic heading or aggregate - that is the average prices. STD Standard deviation of each country’s CPD or CPRD residuals for the basic heading or aggregate. It can be converted to a country variation coefficient by multiplying by 100. PLI Price level indices. The PPPs expressed as a ratio of the corresponding rebased exchange rates in row. #Number of products specified for the basic heading or aggregate.

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Item details Dikhanov tables Item Details Item codeCode of the basic heading or aggregate covered by the Table. Item nameName of the basic heading or aggregate covered by the Table. Period Period during which the prices for the products covered by the Table were collected. STD Standard deviation of the product’s CPD or CPRD residuals. It can be converted to a product variation coefficient by multiplying by 100. The mean of a product’s residuals is 1. CountNumber of countries pricing the product. Residual CPD or CPRD residuals by product and country. CPD residuals in the Dikhanov table are equal to the logarithms of the CUP-Ratios in the Quaranta table. Average PriceAverage price in local currency units. #Number of price observations on which the average prices at [16] are based. Coef. of Var.Price observation variation coefficient. XR Ratio Price ratios based on exchange rate converted prices. The converted prices expressed as a percentage of their geometric mean.

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Both tables provides essentially the same information, but CPD residuals are equal to the logarithms of CUP-ratios Relation between PPP-Ratios and CPD residuals Relation between Quaranta and Dikhanov Tables Dikhanov Tables can be compiled for a group of BHs (an aggregate), they use color schemes to highlight potential outliers and can be collapsed to present only residuals for items Quaranta tables presents the relations within an item potentially clearer 0 to 1414 to 4747 to 7878 to 128128 to 212212 to 739739 to Less than -2.0 -2.0 to - 0.75 -0.75 to - 0.25 -0.25 to 0.25 0.25 to 0.75 0.75 to 2.0 More than 2.0 CPD residuals PPP-Ratios

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Case Study We will analyze a Quaranta Table and highlight the problems encountered. We will follow the instructions provided in this presentation.

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21 THANK YOU

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