Affiliations: [a] Departament d’Anàlisi Oficina Municipal de Dades – Ajuntament de Barcelona, Spain | [b] Institut d’Estudis Regionals i Metropolitans de Barcelona, Spain | [c] Departament d’Economia i Empresa – Universitat Pompeu Fabra, Spain | [d] Departament d’Economia i d’Història Econòmica – Universitat Autònoma de Barcelona, Spain | [e] Statistics and Data Directorate – Organisation for Economic Co-operation and Development (OECD), France
Correspondence:
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Corresponding author: Daniel Sánchez-Serra, Head of price statistics and purchasing power parities unit at the Statistics and Data Directorate, Organisation for Economic Co-operation and Development (OECD), 2 rue André-Pascal, 75775 Paris Cedex 16, France. E-mail: [email protected].
Note: [1] This paper is based on a preliminary version published as a working paper from the Regional Development Policy Division of the OECD entitled “Subnational purchasing power of parity in OECD countries” available on the following link: \hrefhttps://doi.org/10.1787/ 3d8f5f51-en https://doi.org/10.1787/ 3d8f5f51-en.
Note: [2] This paper does not necessary reflect the official views of the OECD or its member countries. The opinions expressed and arguments employed are those of the author(s).
Abstract: Due to the lack of Purchasing Power Parities (PPPs) at sub-national level, regional Gross Domestic Product (GDP) figures have been traditionally adjusted using national PPPs. The simplifying assumption that there are no regional differences in a country, and implicitly that all regions of a country have the same cost of living, might lead to regional GDP figures (adjusted for national PPPs) that are biased and might limit the design and implementation of regional policies. This paper tries to overcome this problem by estimating PPPs at sub-national level for OECD countries (TL2 regions) and EU-27 countries (NUTS2 regions) for a time series 2000–2018 through an econometric method, which uses publicly available data and is based on the Balassa-Samuelson hypothesis. This paper also presents the implications of adjusting regional macroeconomic figures with sub-national PPPs in terms of economic welfare, regional convergence and the impact on EU cohesion funds.
