A Comparison Of Pound Sterling‐Australian Dollar Purchasing Power Parities For Selected Population Sub‐Groups In Australia And The United Kingdom1

This paper utilizes Household Expenditure Survey and Consumer Price Index data supplemented by private survey data in an attempt to compare the purchasing power parities of the pound sterling and the Australian dollar for a range of population sub‐groups in the United Kingdom and Australia. In spite of the close political, economic, social and cultural ties that exist between these two countries, there have been no attempts to measure differences in living costs and real expenditures. Further, Australia has not been a party to the International Comparisons project of the Statistical Office of the United Nations. This study derives purchasing power parities which explicitly account for variations in expenditure patterns of different population sub‐groups. For example, a household living in London intending to move to Sydney will find it useful to have a comparison of cost‐of‐living between households living in these two cities which takes into account explicitly the general expenditure patterns in these two cities. Due to the nature of the data, it was necessary to employ a new index number method derived by one of the authors.