Regional Price Levels in the Czech Republic

Data on economic performance and wellbeing of households in countries and regions belong to the most desired indicators. Besides analysis of evolution of indicators comparison of countries and regions is carried out. International Comparison Programme (ICP) has been developed for comparison of countries from economic point of view. European Comparison Programme (ECP) is used for comparison of European countries. ECP is a part of International Comparison Programme. Indicators are primarily valued at national currency; however they have to be value at common currency in order to allow international comparison. Revaluation to widespread currency (e.g. US dollar) is not appropriate method as exchange rate is volatile and it is also influenced by external factors and does not necessarily expresses a relation between price levels. The international methodology for Purchase Power Parity (PPP) that indicates a price level of particular country has been developed by international institutions. Using PPP indicators at national currency are revaluated to the artificial currency (Purchase Power Standard, PPS), which has the same strength in all countries. Gross domestic product (GDP) per capita in PPS is usually used for comparison of economic performance.

Currently, more and more attention is paid to regions and theirs comparison. Only selected indicators such as gross domestic product (GDP) is available on regional level in European countries. Official statistics (Eurostat) applies national purchase power parity to revaluation of regional indicators to purchase power standard. Actually, it is assumed that price level in the country is the same in all regions. Based on empirical data it is obvious that the assumption is not necessarily fulfilled. It has been proved in many countries (e.g. USA, Germany and United Kingdom).

The Department of Economic Statistics of University of Economics in Prague has been dealing with regional price level for several years. The Department was beneficiary of the grant ‘Estimation of regional price levels’ provided by the Internal Grant Agency of the University, project No. 12/2011 in the period 2011 –  2012. Methodology was developed with the grant and also regional price levels for the year 2007 were estimated. The goal was to develop a methodology that is based on the same principles as the international methodology taking into account limited data sources at regional level. Estimated regional price levels express price differences in products purchased by households as the estimate is based on final household consumption expenditure only. Other components of GDP by expenditure approach are not included. Recently, the methodology has been updated due to changes in international standard of national accounts (standard ESA 2010 became effective), changes in statistical surveys etc. The latest estimate is available for the year 2012.

Results are publically available on website under condition of proper citation of a source.

Information about methodology and results are available, for example in:

ČADIL, Jan, MAZOUCH, Petr, MUSIL, Petr, KRAMULOVÁ, Jana. True regional purchasing power: evidence from the Czech Republic. Post-Communist Economies, 2014, Vol. 26, No. 2, pp. 241–256. ISSN 1463-1377.

KRAMULOVÁ, Jana, MUSIL, Petr, ZEMAN, Jan, MICHLOVÁ, Radka. Regional Price Levels in the Czech Republic – Past and Current Perspectives. Statistika. 2016, Vol. 96, No. 3, pp. 22–34. ISSN 0322-788X. Available: https://www.czso.cz/documents/10180/32912822/32019716q3022.pdf/c379c20d-62ee-446d-9867-05d81129a490?version=1.0.

 

Members of the Project Team

Ing. Petr Mazouch, Ph.D. (leader)

doc. Ing. Jan Čadil, Ph.D.

Ing. et Ing. Jana Kramulová, Ph.D.

Ing. Petr Musil, Ph.D.

 

Contact:

Ing. Petr Musil, Ph.D.

E-mail: petr.musil@vse.cz

 

Table with results