Abstract
When households are subject to quantity constraints, conventional measures of real consumption and purchasing power parity for cross-national comparisons suffer from a new type of index number problem. Additional information on preferences taken from a demand system estimated for a similar economy without quantity constraints can be employed to calculate distance function and money-metric indexes of relative real consumption and corresponding measures of purchasing power parity. The procedure is illustrated in a comparison of East and West German consumer prices and consumption expenditures for 1977.
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