Multilateral Sato–Vartia index for international comparisons of prices and real expenditures

Naohito Abe and D.S. Prasada Rao ()

Economics Letters, 2019, vol. 183, issue C, -

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. We show that the SV index is only one of many logarithmic indices that satisfy the factor reversal test discussed in index number theory. In this paper we propose several transitive multilateral versions of the SV index but note that these do not satisfy factor reversal test. We derive closed form expressions for the transitive logarithmic indices and empirically implement the new indices for cross-country price comparisons 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)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Multilateral Sato-Vartia Index for International Comparisons of Prices and Real Expenditures (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:183:y:2019:i:c:26

DOI: 10.1016/j.econlet.2019.108535

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