The General Price Level and the External Trading Gain. ESRI Memorandum Series No. 36 1966(?)

Geary, R.C. (1966) The General Price Level and the External Trading Gain. ESRI Memorandum Series No. 36 1966(?). [Policy Paper]

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Abstract

The well-known national accounting identity income=product in current price terms has the advantage that the terms "income" and "product" are indistinguishable and may be used interchangably. This is not necessarily, or even generally, the case when accounting entities are expressed at constant prices. It is necessary to have regard to some aspects of the controversial problem of accounting at constant prices because at the macro, as at the micro, level, prices and quanta are so intimately related that no price index has any objective meaning unless it can be envisaged as the deflator of a current flow. This near truism does not, unfortunately, solve the methodological problem of making price or volume index numbers: in the identity PQ = V we know only V, except in the case of single, well-defined products. To a certain extent, however, the flow concept does help conceptually in defining price index numbers.

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