Multilateral Sato-Vartia Index for International Comparisons of Prices and Real Expenditures

Naohito Abe and D.S. Prasada Rao ()

No DP19-1, RCESR Discussion Paper Series from Research Center for Economic and Social Risks, Institute of Economic Research, Hitotsubashi University

Abstract: The Sato-Vartia (SV) index for bilateral price comparisons has impressive analytical properties and is used intensively in recent international trade and macroeconomic analyses. In this paper we propose several ways of constructing transitive multilateral version of the SV index. We show that the SV index is only one of many logarithmic indices that satisfy the factor reversal test discussed in index number theory. We derive closed form expressions for the generalized SV indices and empirically implement the new indices for making cross-country price comparison using World Bank data from the 2011 International Comparison Program.

Keywords: Sato-Vartia Index; Multilateral comparisons; Transitivity; Factor Reversal Test (search for similar items in EconPapers)
JEL-codes: C13 C83 E01 E31 (search for similar items in EconPapers)
Pages: 7 pages
Date: 2019-06
New Economics Papers: this item is included in nep-int and nep-mac
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https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/30403/dp19-1_rcesr.pdf

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Journal Article: Multilateral Sato–Vartia index for international comparisons of prices and real expenditures (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:hit:rcesrs:dp19-1

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