Who Shrunk China? Puzzles in the Measurement of Real GDP
The latest World Bank estimates of real GDP per capita for China are significantly lower than previous ones. We review possible sources of this puzzle and conclude that it reflects a combination of factors, including substitution bias in consumption, reliance on urban prices which we estimate are higher than rural ones, and the use of an expenditure-weighted rather than an output-weighted measure of GDP. Taking all these together, we estimate that real per-capita GDP in China was 50% higher relative to the U.S. in 2005 than the World Bank estimates.
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- William Barnett & W. Erwin Diewert & Arnold Zellner, 2009.
"Introduction to Measurement with Theory,"
WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS
200906, University of Kansas, Department of Economics, revised Apr 2009.
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