Why 1990 international Geary-Khamis dollars cannot be a foundation for reliable long run comparisons of GDP

Liam Brunt and Antonio Fidalgo
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Antonio Fidalgo: Fresenius University of Applied Sciences

No 25/2018, Discussion Paper Series in Economics from Norwegian School of Economics, Department of Economics

Abstract: Using a large, new dataset of agricultural prices and quantities for many countries and regions, we create five new international Geary-Khamis pounds – for 1870, 1845, 1775, 1705, and a superior chained series. We show that estimated levels and changes in output per worker look very different – more extreme – using 1705 international pounds and 1990 international dollars, compared to all other series; growth rates appear substantially higher using 1990 international dollars. In short, out-of-sample baskets and/or prices create extremely unreliable output estimates. We also show that individual country price indices (rather than international indices) can generate substantially different estimated growth rates.

Keywords: Geary-Khamis prices; economic growth; international comparisons; price indices (search for similar items in EconPapers)
JEL-codes: C43 C82 N10 N50 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2018-11-28
New Economics Papers: this item is included in nep-gro and nep-his
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