Illuminating Economic Growth

Yingyao Hu and Jiaxiong Yao

No 2019/077, IMF Working Papers from International Monetary Fund

Abstract: This paper seeks to illuminate the uncertainty in official GDP per capita measures using auxiliary data. Using satellite-recorded nighttime lights as an additional measurement of true GDP per capita, we provide a statistical framework, in which the error in official GDP per capita may depend on the country’s statistical capacity and the relationship between nighttime lights and true GDP per capita can be nonlinear and vary with geographic location. This paper uses recently developed results for measurement error models to identify and estimate the nonlinear relationship between nighttime lights and true GDP per capita and the nonparametric distribution of errors in official GDP per capita data. We then construct more precise and robust measures of GDP per capita using nighttime lights, official national accounts data, statistical capacity, and geographic locations. We find that GDP per capita measures are less precise for middle and low income countries and nighttime lights can play a bigger role in improving such measures.

Keywords: WP; real gross domestic product; economic activity; Nighttime lights; measurement error; GDP per capita; nighttime light; light-predicted GDP; real GDP measure; low income; GDP measurement; Income; Informal economy; Global (search for similar items in EconPapers)
Pages: 57
Date: 2019-04-09
New Economics Papers: this item is included in nep-big and nep-gro
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Citations: View citations in EconPapers (17)

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