Maddison and Wu: â€˜Measuring Chinaâ€™s Economic Performanceâ€™
Angus Maddison and Harry Wu (2008) claim that, in 2003, Chinaâ€™s GDP was 73% of that of the United States on a purchasing power parity (PPP) basis. Rejecting the results of the 2005 International Comparison Program (ICP), they construct their own PPP using a 1986 GDP estimate for China (Ren & Chen 1995) which they adjust upwards, and then extrapolate to 2003 using their revised growth rates for China, which they adjust downwards. This note examines the validity of their adjustments and assumptions, and finds them to be inconsistent with recommendations both from the perspective of index number theory and recommended national accounting practices. The 2005 PPP estimates from the ICP, which Maddison and Wu reject, produce a more plausible estimate of the size of Chinaâ€™s economy relative to that of the US (43% in 2005).
Volume (Year): 11 (2010)
Issue (Month): 1 (January)
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