Productivity Research Notes (PRN Series), No. 2611. Cross-country productivity comparisons are fundamentally shaped by how national statistical agencies treat quality change in price indices. When quality improvements are incompletely captured, measured inflation is overstated and real output growth understated—with differences accumulating over time. Neither constant PPPs, which extrapolate from a benchmark year using national deflators, nor current PPPs, which incorporate updated international price data, can fully resolve these inconsistencies. Interpreting productivity level comparisons therefore requires careful attention to cross-country differences in price measurement methods.
Ho et al. (Thu,) studied this question.