Constructing Bounds on Per Capita Income Differentials Across Countries

Posted: 30 Nov 2000

See all articles by Robert J. Hill

Robert J. Hill

UNSW Australia Business School, School of Economics

Abstract

The results of purchasing power parity (PPP)-based comparisons of income across countries can be quite sensitive to the choice of index number formula. Tighter bounds on per capita income differentials can be constructed either by assuming homothetic preferences, or by estimating a demand system. Both approaches are used to construct bounds on per capita income differentials across the OECD countries. The paper concludes by discussing the strengths and weaknesses of each approach.

JEL Classification: C43, F31, O47

Suggested Citation

Hill, Robert James, Constructing Bounds on Per Capita Income Differentials Across Countries. Scandinavian Journal of Economics, Vol. 102, No. 2, Available at SSRN: https://ssrn.com/abstract=239544

Robert James Hill (Contact Author)

UNSW Australia Business School, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia

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