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Shining a Light on Purchasing Power Parities

Author

Listed:
  • Maxim Pinkovskiy
  • Xavier Sala-i-Martin

Abstract

We use satellite-recorded nighttime lights as an independent benchmark of economic activity in order to generate three findings in the study of PPP-adjusted estimates of GDP. First, PPP-adjusted estimates better describe poor economies than do market exchange rate-based estimates today, although this was not the case in the late 1990s. Second, estimates of PPPs have been steadily improving from one price survey round to the next. Third, it has tended to be optimal to only use the latest price data and to revise existing PPP-adjusted estimates whenever a new price survey is released.

Suggested Citation

  • Maxim Pinkovskiy & Xavier Sala-i-Martin, 2020. "Shining a Light on Purchasing Power Parities," American Economic Journal: Macroeconomics, American Economic Association, vol. 12(4), pages 71-108, October.
    • Handle: RePEc:aea:aejmac:v:12:y:2020:i:4:p:71-108
    DOI: 10.1257/mac.20190037
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    Citations

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    Cited by:

    1. Angus Deaton & Paul Schreyer, 2022. "GDP, Wellbeing, and Health: Thoughts on the 2017 Round of the International Comparison Program," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 68(1), pages 1-15, March.
    2. Bluhm, Richard & Krause, Melanie, 2022. "Top lights: Bright cities and their contribution to economic development," Journal of Development Economics, Elsevier, vol. 157(C).

    More about this item

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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    1. Shining a Light on Purchasing Power Parities (AEJ:MA 2020) in ReplicationWiki

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