Definition: Paasche type PPP

Category: Purchasing power parities

A PPP (Purchasing power parity) for a basic heading or an aggregate between two countries, country B and country A, where the reference country is country A and the weights are those of country B. At the basic heading level, the PPP is defined as a quasi-weighted geometric average of the price relatives between country B and country A for the products representative of country B. At an aggregate level, the PPP is defined as the weighted harmonic average of the PPPs between country B and country A for the basic headings covered by the aggregate with the expenditure shares of country B being used as weights. 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 establishing rules for the provision of basic information on PPPs, Official Journal of the European Union No L 336, 20.12.2007, p. 1 - 24