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Mismeasuring long-run growth: the bias from splicing national accounts—the case of Spain

Listed author(s):
  • Leandro Prados de la Escosura

    ()

    (Universidad Carlos III de Madrid, Spain and CEPR, London UK.)

Comparisons of economic performance over space and time largely depend on how statistical evidence from national accounts and historical estimates are spliced. To allow for changes in relative prices, GDP benchmark years in national accounts are periodically replaced with new and more recent ones. Thus, a homogeneous long-run GDP series requires linking different temporal segments of national accounts. The choice of the splicing procedure may result in substantial differences in GDP levels and growth, particularly as an economy undergoes deep structural transformation. An inadequate splicing may seriously bias the measurement of GDP levels and growth rates. Alternative splicing solutions are discussed in this paper for the particular case of Spain, a fast-growing country in the second half of the twentieth century. It is concluded that the usual linking procedure, retropolation, is seriously flawed as it tends to bias GDP levels upwards and, consequently, to underestimate growth rates, especially for developing countries experiencing structural change. An alternative interpolation procedure is proposed.

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File URL: http://dx.doi.org/10.1007/s11698-015-0131-4
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Article provided by Association Française de Cliométrie (AFC) in its journal Cliometrica, Journal of Historical Economics and Econometric History.

Volume (Year): 10 (2016)
Issue (Month): 3 (September)
Pages: 251-275

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Handle: RePEc:afc:cliome:v:10:y:2016:i:3:p:251-275
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  1. de la Escosura, Leandro Prados, 2007. "Growth and structural change in Spain, 1850–2000: a european perspective," Revista de Historia Económica, Cambridge University Press, vol. 25(01), pages 147-181, January.
  2. Prados de la Escosura, Leandro & Rosés, Joan R., 2009. "The Sources of Long-Run Growth in Spain, 1850-2000," The Journal of Economic History, Cambridge University Press, vol. 69(04), pages 1063-1091, December.
  3. Krantz, Olle, 1994. "Service Production in Historical National Accounts," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 40(1), pages 19-41, March.
  4. Prados de la Escosura, Leandro, 2000. "International Comparisons of Real Product, 1820-1990: An Alternative Data Set," Explorations in Economic History, Elsevier, vol. 37(1), pages 1-41, January.
  5. Cassing, Shirley, 1996. "Correctly Measuring Real Value Added," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 42(2), pages 195-206, June.
  6. Stefano Fenoaltea, 1976. "Real Value Added and the Measurement of Industrial Production," NBER Chapters,in: Annals of Economic and Social Measurement, Volume 5, number 1, pages 111-137 National Bureau of Economic Research, Inc.
  7. Harrison, Mark, 1998. "Trends in Soviet labour productivity, 1928 85: War, postwar recovery, and slowdown," European Review of Economic History, Cambridge University Press, vol. 2(02), pages 171-200, August.
  8. Jutta Bolt & Jan Luiten Zanden, 2014. "The Maddison Project: collaborative research on historical national accounts," Economic History Review, Economic History Society, vol. 67(3), pages 627-651, 08.
  9. World Bank, 2013. "Measuring the Real Size of the World Economy : The Framework, Methodology, and Results of the International Comparison Program—ICP," World Bank Publications, The World Bank, number 13329, September.
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