What would be the correct procedure to adjust costs figures to make them comparable?
For example, I find two papers that report the cost of similar pesticides in a developing country. One reports USD \$100 in 2010 dollars for pesticide A. The other reports USD \$120 in dollars of 2015, for pesticide B.
I want to compare them both and I've seen different approaches. I would like to hear opinions on the most appropriate procedure. Here's some of the procedures I've seen around:
1) use nominal exchange rate for the respective year (2010) to convert reported costs in dollars to local currency. Then use some price index to adjust the local currency for inflation, to express local currency of 2010 in local currency of 2015. And then use the exchange rate for 2015 to convert the local currency again to usd.
2) similar, but without inflation adjustment. So, only using 2010 exchange rate to get local currency and then use 2015 exchange rate to express local currency in 2015 dollars. The argument here is that inflation adjustment is not necessary because nominal exchange rates partly reflect changes in prices (so kind of assuming the theoretical postulate that the real exchange rate is constant over time).
3) like the first one, but adjusting also for inflation in foreign currency.
4) other approaches using GdP deflators.