Showing papers by "D. S. Prasada Rao published in 2009"

Consistent comparisons of real incomes across time and space

Abstract: Consistent real income comparisons over time and space are critical for studies on catch-up and convergence. The paper provides an analytical framework for making real income comparisons across countries and over time that satisfy transitivity and at the same time reflect an underlying nonhomothetic utility function for a representative consumer. The concept of reference price comparisons is developed and implemented using nonhomothetic translog and almost ideal demand systems. The paper discusses a direct approach, which uses all the parameters of the demand system to make real income comparisons, and an indirect approach, which adjusts the national price-based comparisons using reduced information only on income elasticities of demand. The proposed approach is empirically implemented using data from the 1980 and 1996 benchmark data from the International Comparison Program, and the empirical results confirm the analytical results discussed in the paper.

Measuring health inequality with realization of potential life years (RePLY)

Abstract: This paper proposes a new method to measure health inequalities that are caused by conditions amenable to policy intervention. The method is built on a technique that can separate avoidable and unavoidable mortality risks, using world mortality data compiled by the World Health Organization for the year 2000. The new method is applied to data from 191 countries. It is found that controlling for unavoidable mortality risks leads to a lower estimate of health inequality than otherwise, especially for developed countries. Furthermore, although countries with a higher life expectancy at birth tend to have lower health inequality, there are significant variations in health inequalities across countries with the same life expectancy. The results therefore support the WHO's plea for using health inequality as a distinct parameter from the average level of health in assessing the performance of health systems.

Purchasing power parities of currencies: Recent advances in methods and applications

Abstract: Contents: Foreword PART I: INTRODUCTION Introduction D.S. Prasada Rao 2. The Compilation of Purchasing Power Parities: The Eurostat-OECD Purchasing Power Parity Programme David Roberts PART II: SYSTEM METHODS FOR PPP COMPUTATION 3. Aggregation Methods in International Comparisons: An Evaluation Bert Balk 4. Generalised Elteto-Koves-Szulc and Country-Product-Dummy Methods for International Comparisons D.S. Prasada Rao 5. True International Income Comparisons Correcting for Substitution Bias Steve Dowrick 6. Additivity, Matrix Consistency and a New Method for International Comparisons of Real Income and Purchasing Power Parities Itsuo Sakuma, D.S. Prasada Rao and Yoshimasa Kurabayashi 7. Implicit Data Structures and Properties of Selected Additive Indices James Cuthbert PART III: METHODS FOR SPATIAL LINKING AND ANALYSIS OF PRICE STRUCTURES 8. Similarity Indexes and Criteria for Spatial Linking Erwin Diewert 9. Comparing Per Capita Income Levels across Countries using Spanning Trees: Robustness, Prior Restrictions, Hybrids and Hierarchies Robert Hill 10. Chaining Methods for International Real Product and Purchasing Power Comparisons: Issues and Alternatives Bettina Aten and Alan Heston 11. Aggregation Methods based on Structural International Prices Sergey Sergeev PART IV: APPLICATIONS 12. Purchasing Power Parities and their Policy Relevance Michael Ward 13. Purchasing Power Parity Adjustments for Productivity Level Comparisons Bart van Ark and Marcel Timmer 14. PPPs and the Price Competitiveness of International Tourism Destinations Larry Dwyer, Peter Forsyth and D.S. Prasada Rao

Global Income Distribution and Inequality: 1993 and 2000

Abstract: The nature of global and regional income distributions and the extent of inequality are examined using country-level data on income distributions drawn from World Bank studies and the World Institute for Development Economics Research for the period 1993 - 2000. Beta-2 income distributions are fitted to population and income share data for 91 countries. Regional and global income distributions are obtained as population weighted mixtures of the country-specific income distributions. Gini and Theil inequality measures for countries, regions and the world are expressed in terms of the parameters of the beta-2 distributions, and, for regions and the world, decomposed into their within- and between-country components. Empirical results show a high degree of global inequality, but with some evidence of inequality decreasing between the two years, with the decrease being largely attributable to growth in China.

Additivity, Matrix Consistency and a New Method for International Comparisons of Real Income and Purchasing Power Parities

Abstract: The paper re-examines the concepts of additivity and matrix consistency, invoked in the context of methods for international comparisons, provides a more formal treatment of these concepts and distinguishes them using the numerical values of the eigen values implicit in these concepts. Given the importance attached to the concept of additivity within the International Comparison Project/Program (ICP), the paper provides a framework for easily identifying methods satisfying additivity. The main objective of the paper is to provide an answer in the negative to a recent conjecture of Rao (1997) which postulates that the Geary-Khamis method may be the only multilateral aggregation method that is additively consistent and transitive. In this paper a new method of aggregation, a variant of the Kurabayashi-Sakuma (1981) class of methods, is proposed which is shown to satisfy the properties of commensurability, transitivity and additivity. A numerical illustration showing the results from the new method using 1990 benchmark results for the OECD countries is also provided in the paper.

Measuring avoidable health inequality with Realization of Conditional Potential Life Years (RCPLY)

Abstract: In a series of papers (Tang, Chin and Rao, 2008; and Tang, Petrie and Rao 2006 & 2007), we have tried to improve on a mortality-based health status indicator, namely age-at-death (AAD), and its associated health inequality indicators that measure the distribution of AAD. The main contribution of these papers is to propose a frontier method to separate avoidable and unavoidable mortality risks. This has facilitated the development of a new indicator of health status, namely the Realization of Potential Life Years (RePLY). The RePLY measure is based on the concept of a “frontier country” that, by construction, has the lowest mortality risks for each agesex group amongst all countries. The mortality rates of the frontier country are used as a proxy for the unavoidable mortality rates, and the residual between the observed mortality rates and the unavoidable mortality rates are considered as avoidable morality rates. In this approach, however, countries at different levels of development are benchmarked against the same frontier country without considering their heterogeneity. The main objective of the current paper is to control for national resources in estimating (conditional) unavoidable and avoidable mortality risks for individual countries. This allows us to construct a new indicator of health status – Realization of Conditional Potential Life Years (RCPLY). The paper presents empirical results from a dataset of life tables for 167 countries from the year 2000, compiled and updated by the World Health Organization. Measures of national average health status and health inequality based on RePLY and RCPLY are presented and compared.

Exploring the links between corruption and growth

Abstract: Corruption is a widespread phenomenon, but relatively little is confidently known about its macroeconomic consequences. This paper explicitly models the transmission channels through which corruption indirectly affects growth. Results suggest that corruption hinders growth through its adverse effects on investment in physical capital, human capital, and political instability. Concurrently, corruption is found to foster growth by reducing government consumption and, less robustly, increasing trade openness. Overall, a total negative effect of corruption on growth is estimated from these channels. These effects are found to be robust to modifications in model specification, sample coverage, and estimation techniques as well as tests for model exhaustiveness. Moreover, the results appear supportive of the notion that the negative effect of corruption on growth is diminished in economies with low governance levels or a high degree of regulation. No one-size-fits-all policy response appears supportable.

Purchasing Power Parities of Currencies

Abstract: This up-to-date book demonstrates how the purchasing power parities (PPPs) of currencies are being increasingly used in place of exchange rates for a variety of purposes. These include: comparisons of real income, measurements of global inequality and poverty, calculation of the human development index and assessment of nations economic performance.

A value-added based measure of health system output and estimating the efficiency of OECD health systems

Abstract: Life expectancy at birth is the most commonly used measure for health system output. However, there are a number of reasons why it may be a poor proxy. First, life expectancy assumes a stationary population and thus does not take into account the current demographic structure of a country; and second, the output of a health system should be measured in terms of the value-added to the population’s health status rather than health status itself. The paper develops a new measure of health system output, the Incremental Life Years to address these problems. The new measure is applied to study health system output, efficiency and total factor productivity in OECD countries for the years 2000 and 2004. The new measure provides different results compared to those based on the traditional life expectancy measure, and the differences are further accentuated when changes in efficiency and productivity are estimated.