Generalized Theil-Tornqvist Indices with Applications to International Comparisons of Prices and Real Output

The Theil-Tornqvist index number is widely used for binary comparisons of prices, output and productivity. This paper describes various generalizations of the Theil-Tornqvist index for purposes of multilateral spatial comparisons due to Caves, Christensen and Diewert, and more recent further generalizations due to Prasada Rao and Selvanathan based on the ''stochastic approach'' to index numbers. The applicability of the new index numbers is demonstrated using international comparison data on private consumption expenditure and manufacturing sector output.