One view of the consequence of trade among countries is that it tends to equalize prices of tradable goods in different countries. This paper reexamines this view when both geographic proximity and trade flows are taken into account. Two hypotheses are presented. The first is that distance is...

Purchasing power parity exchange rates, or PPPs, are price indexes that summarize prices in each country relative to a numeraire country, typically the United States. These numbers are used to compare living standards across countries, by academics in studies of economic growth, particularly...

Data from the International Comparison Program (ICP) generate a number of analyses examining price and quantity relationships across countries. Although geographic location is sometimes evoked to explain differences across observations, it is seldom used to measure the extent of this...