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Implementing US GDP in Chained Prices for Cross-country GDP Growth and Sectoral Comparisons: Application to Selected ASEAN Countries

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  • Dumagan, Jesus C.

Abstract

GDP in constant prices of ASEAN countries suffers from substitution bias by ignoring relative price changes and makes GDP growth and shares dependent on the base year. These analytical deficiencies led the US since the mid-1990s to convert GDP from constant to chained prices. Thus, cross-country comparisons in constant prices are analytically shaky even with the same base year. Therefore, this paper implements US GDP in chained prices in Indonesia, Malaysia, Philippines, and Thailand to alleviate substitution bias and prevent baseyear dependence of GDP growth and shares for valid cross-country comparisons. Converting UN GDP data from constant 1990 prices to chained prices affected Malaysia and the Philippines more than Indonesia and Thailand. Shares of GDP level during 2002-06 show Malaysia’s industry sector expanded (43.6 to 47.6 percent) while its service sector shrunk (49.1 to 43.7 percent). In the Philippines, the agriculture sector shrunk (19.2 to 14.7 percent) while the service sector expanded (48.6 to 53.6 percent). Shares of GDP growth during 2002-06 show the industry sector drove Thailand’s GDP growth, contributing around 54 percent, while the service sector drove GDP growth in Indonesia, Malaysia, and in the Philippines, contributing around 49, 49, and 60 percent, respectively, before and after conversion.

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Bibliographic Info

Paper provided by Philippine Institute for Development Studies in its series Discussion Papers with number DP 2008-28.

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Length: 31
Date of creation: 2008
Date of revision:
Handle: RePEc:phd:dpaper:dp_2008-28

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Keywords: real GDP; constant prices; chained prices; Fisher index;

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References

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  1. Diewert, W Erwin, 1978. "Superlative Index Numbers and Consistency in Aggregation," Econometrica, Econometric Society, Econometric Society, vol. 46(4), pages 883-900, July.
  2. Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, Elsevier, vol. 4(2), pages 115-145, May.
  3. J. C. Dumagan & V. E. Ball, 2009. "Decomposing growth in revenues and costs into price, quantity and total factor productivity contributions," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 41(23), pages 2943-2953.
  4. Joe Robjohns, 2007. "Methods explained: Contributions to growth rates under annual chain-linking," Economic and Labour Market Review, Palgrave Macmillan, vol. 1(6), pages 53-56, June.
  5. Dumagan, Jesus C., 2008. "Avoiding Anomalies of GDP in Constant Prices by Conversion to Chained Prices: Accentuating Shifts in Philippine Economic Transformation," Discussion Papers, Philippine Institute for Development Studies DP 2008-24, Philippine Institute for Development Studies.
  6. Whelan, Karl, 2002. "A Guide to U.S. Chain Aggregated NIPA Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(2), pages 217-33, June.
  7. Dumagan, Jesus C., 2002. "Comparing the superlative Tornqvist and Fisher ideal indexes," Economics Letters, Elsevier, Elsevier, vol. 76(2), pages 251-258, July.
  8. Jesus C. Dumagan, 2008. "Avoiding Anomalies of GDP in Constant Prices by Conversion to Chained Prices," Macroeconomics Working Papers 22632, East Asian Bureau of Economic Research.
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Cited by:
  1. Jesus C. Dumagan, 2010. "Computing Additive Chained Volume Measures of GDP Subaggregates," Macroeconomics Working Papers 23094, East Asian Bureau of Economic Research.

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