An impossibility theorem concerning multilateral international comparison of volumes

摘要

Comparing wealth of nations-or across years-is something an economist naturally wants to do. The classic problem we then face, and which the standard GDP ignores, is that prices are not necessarily the same in different countries. Trying to correct for this, quite a few methods of comparison have been designed, but index theorists have always been aware that all of them have their drawbacks, which for instance is reflected in overviews of Balk (1996) and Hill (1997). As long as we only want to compare two countries we do have fairly acceptable index numbers, but all known multilateral indices suffer from unwanted peculiarities. A natural question is then whether we can expect a perfect method ever to be discovered. The statement of this paper is that this infallible method does not exist and that the apples and oranges character of multilateral comparison is more fundamental.