Estimating real production and expenditures across nations : a proposal for improving the Penn World Tables
From its inception, the Penn World Tables (PWT), building on the International Comparisons Program (ICP) of the United Nations, has sought to compare the standard of living of individuals in different countries. That is, the term"real GDP per capita"as reported in the PWT is intended to represent the ability to purchase goods and services by a representative agent in the economy. The same is true of benchmark comparisons as published by the United Nations, Eurostat, or OECD. But this expenditure-side interpretation of real GDP is quite different from the uses to which benchmark ICP and PWT data are frequently applied, such as in growth regressions, where"real GDP"is intended to reflect the production side of the economy. In this paper the authors propose a new approach to international comparisons of real GDP measured from the output side. They modify the traditional Gary-Khamis system, which measures real GDP from the expenditure side using real domestic expenditure, to include differences in the terms of trade between countries. The analysis shows that this system has a strictly positive solution under mild assumptions. On the basis of a set of domestic final output, import, and export prices and values for 151 countries in 1996, differences between real GDP measured from the expenditure and output side can be substantial, especially for small open economies.
|Date of creation:||01 Mar 2007|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- W. Erwin Diewert, 1996.
"Axiomatic and Economic Approaches to International Comparisons,"
NBER Working Papers
5559, National Bureau of Economic Research, Inc.
- W. Erwin Diewert, 1999. "Axiomatic and Economic Approaches to International Comparisons," NBER Chapters, in: International and Interarea Comparisons of Income, Output, and Prices, pages 13-107 National Bureau of Economic Research, Inc.
- Yo Chul Choi & David Hummels & Chong Xiang, 2006. "Explaining Import Variety and Quality: The Role of the Income Distribution," NBER Working Papers 12531, National Bureau of Economic Research, Inc.
- Daron Acemoglu & Jaume Ventura, 2002.
"The World Income Distribution,"
The Quarterly Journal of Economics,
MIT Press, vol. 117(2), pages 659-694, May.
- Bernard, Andrew B & Jones, Charles I, 1996. "Comparing Apples to Oranges: Productivity Convergence and Measurement across Industries and Countries," American Economic Review, American Economic Association, vol. 86(5), pages 1216-38, December.
When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:4166. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi)
If references are entirely missing, you can add them using this form.