Definition: Basic heading

Category: Purchasing power parities

"The lowest level of aggregation of items in the GDP (Gross domestic product) breakdown for which parities are calculated." Article 3(e) PPP (Purchasing power parity) Regulation.

This level of aggregation is generally determined by the lowest level of final expenditure for which explicit expenditure weights can be estimated. Hence, while in principle a basic heading would consist of a group of similar well-defined goods or services, in practice it can cover a broader range of products than is theoretically desirable. Basic headings are the building blocks of a comparison. It is at the level of the basic heading that expenditures are defined, products selected, prices collected, prices edited and PPPs first calculated and averaged (2012 Methodological manual on purchasing power parities).

"The lowest level of aggregation of items in the GDP breakdown for which parities are calculated." In theory, a basic heading is defined as a group of similar well-defined goods or services. In practice, it is defined by the lowest level of final expenditure for which explicit expenditure weights can be estimated. Thus, an actual basic heading can cover a broader range of products than is theoretically desirable. Basic headings are the building blocks of a comparison. It is at the level of the basic heading that expenditures are defined, products selected, prices collected, prices edited and PPPs first calculated and averaged (2005 Methodological manual on purchasing power parities). http://ec.europa.eu/eurostat/product?code=KS-RA-12-023&mode=view Eurostat and Organization for Economic Cooperation and Development (OECD), "Eurostat - OECD Methodological manual on purchasing power parities (2005 Edition)", Methods and Nomenclatures, Office for Official Publications of the European Communities, Luxembourg, 2006European Union, Regulation (EC) No 1445/2007 of the European Parliament and of the Council of 11 December 2007 establishing common rules for the provision of basic information on Purchasing Power Parities and for their calculation and dissemination, Official Journal of the European Union No L 336, 20.12.2007, p. 1 - 24