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The International Comparison Program: Current Status and Problems

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  • Irving B. Kravis
  • Robert E. Lipsey

Abstract

This paper reviews the International Comparison Program (ICP), a worldwide effort to produce international comparisons of real GDP and its components and purchasing power parities of currencies (PPPs). The robustness of results and future work are considered. A generous estimate of margins of uncertainty in the benchmark estimates might be 20-25 per cent for low-income countries and 7 per cent for high-income countries. The errors in extrapolations to countries not covered by the surveys could go as high as 30-35 per cent. That is still a small range of error compared to that stemming from the use of exchange rates to convert own-currency to common currency measures of output. Furthermore, exchange rate conversions are even more sensitive to methodology than PPP conversions. The notion that exchange comparisons rest on a simple and transparent procedure using standard market data is illusory. The future of ICP measures seems assured in Europe, particularly in the European Community. The prospects for systematic worldwide comparisons do not look as bright. A renewed effort by the United Nations Statistical Office and the World Bank would be needed to maintain an ICP with comprehensive coverage and comparable methods in all major regions.

Suggested Citation

  • Irving B. Kravis & Robert E. Lipsey, 1990. "The International Comparison Program: Current Status and Problems," NBER Working Papers 3304, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:3304 Note: ITI IFM
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    References listed on IDEAS

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    1. Kravis, Irving B, 1984. "Comparative Studies of National Incomes and Prices," Journal of Economic Literature, American Economic Association, vol. 22(1), pages 1-39, March.
    2. Locker, Hugo Krijnse, 1984. "On the Estimation of Purchasing Power Parities on the Basic Heading Level," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 30(2), pages 135-152, June.
    3. Hill, T P, 1977. "On Goods and Services," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 23(4), pages 315-338, December.
    4. Clague, Christopher, 1986. "Short-Cut Estimates of Real Income," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 32(3), pages 313-331, September.
    5. Summers, Robert, 1973. "International Price Comparisons Based Upon Incomplete Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 19(1), pages 1-16, March.
    6. Summers, Robert & Kravis, Irving B & Heston, Alan, 1980. "International Comparisons of Real Product and Its Composition: 1950-77," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 26(1), pages 19-66, March.
    7. Irving B. Kravis & Robert E. Lipsey, 1982. "Towards an Explanation of National Price Levels," NBER Working Papers 1034, National Bureau of Economic Research, Inc.
    8. Bhagwati, Jagdish N, 1984. "Why Are Services Cheaper in the Poor Countries?," Economic Journal, Royal Economic Society, vol. 94(374), pages 279-286, June.
    9. Heston, Alan, 1973. "A Comparison of Some Short-Cut Methods of Estimating Real Product Per Capita," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 19(1), pages 79-104, March.
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    Cited by:

    1. Herrmann-Pillath Carsten, 2001. "A General Refutation of the Law of One Price as Empirical Hypothesis / Eine allgemeine Widerlegung des „Gesetzes des einheitlichen Preises“ als einer empirischen Hypothese," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 221(1), pages 45-67, February.
    2. Leandro Prados de la Escosura, 2010. "Improving Human Development: A Long-Run View," Journal of Economic Surveys, Wiley Blackwell, vol. 24(5), pages 841-894, December.
    3. Jaime R. Marquez & Charles P. Thomas & Corinne Land, 2012. "International relative price levels: a look under the hood," International Finance Discussion Papers 1055, Board of Governors of the Federal Reserve System (U.S.).
    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. Magnus Blomström & Linda S. Goldberg, 2001. "Introduction to "Topics in Empirical International Economics: A Festschrift in Honor of Robert E. Lipsey"," NBER Chapters,in: Topics in Empirical International Economics: A Festschrift in Honor of Robert E. Lipsey, pages 1-14 National Bureau of Economic Research, Inc.
    6. repec:ath:journl:tome:34:v:2:y:2014:i:34:p:13-21 is not listed on IDEAS
    7. Stockman, Alan C & Tesar, Linda L, 1995. "Tastes and Technology in a Two-Country Model of the Business Cycle: Explaining International Comovements," American Economic Review, American Economic Association, vol. 85(1), pages 168-185, March.
    8. Peter Hooper & Elizabeth Vranlovich, 1995. "International comparisons of the levels of unit labor costs in manufacturing," International Finance Discussion Papers 527, Board of Governors of the Federal Reserve System (U.S.).
    9. repec:spt:apfiba:v::y:2018:i::f:8_2_5 is not listed on IDEAS
    10. Robert E. Lipsey & Birgitta Swedenborg, 1993. "The High Cost of Eating: Agricultural Protection and International Differences in Consumer Food Prices," NBER Working Papers 4555, National Bureau of Economic Research, Inc.
    11. Meagher, G. A., 1995. "The International Comparison Project as a source of private consumption data for a global input-output model," Structural Change and Economic Dynamics, Elsevier, vol. 6(1), pages 111-132, March.
    12. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-963, September.
    13. Charles P. Thomas & Jaime R. Marquez & Sean Fahle, 2008. "Measuring U.S. international relative prices: a WARP view of the world," International Finance Discussion Papers 917, Board of Governors of the Federal Reserve System (U.S.).
    14. Milka Kirova & Robert E. Lipsey, 1997. "Does the United States invest "too little?"," Working Papers 1997-020, Federal Reserve Bank of St. Louis.
    15. repec:spt:apfiba:v:8:y:2018:i:2:f:8_2_5 is not listed on IDEAS
    16. Ahmad, Sultan, 1992. "Regression estimates of per capital gross domestic product based on purchasing power parities," Policy Research Working Paper Series 956, The World Bank.
    17. Michaël Freudenberg & Deniz Ünal-Kesenci, 1994. "French and German Productivity Levels in Manufacturing: A Comparison Based on the Industry-of-Origin Method," Working Papers 1994-10, CEPII research center.

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