INTERNATIONAL PRICE COMPARISONS BASED UPON INCOMPLETE DATA*

Abstract

This paper is directed at the following question: given an incomplete set of price data relating to goods or services in some category of output for each of a number of different countries, what arithmetic should be performed on the prices to get a meaningful representation of the relative category price‐levels of the countries? In the course of developing an answer to the question, some broader matters are considered and illuminated. A comparison of category price‐levels for different countries is analogous to a commonly‐encountered problem in many areas, that of ranking ordinally or cardinally in one dimension a group of “entities”—persons, households, firms, industries, etc.—on the basis of sets of measurements associated with the individual entities. It is this point of view which dominates the following presentation.