Estimating real production and expenditures across nations: a proposal for improving the Penn World Tables

Robert Feenstra, Alan Heston, Marcel Timmer and Haiyan Deng

No 4166, Policy Research Working Paper Series from The World Bank

Abstract: 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.

Keywords: Economic Theory&Research; Markets and Market Access; FreeTrade; Access to Markets; Trade Policy (search for similar items in EconPapers)
Date: 2007-03-01
New Economics Papers: this item is included in nep-dev and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www-wds.worldbank.org/external/default/WDSC ... ered/PDF/wps4166.pdf (application/pdf)

Related works:
Journal Article: Estimating Real Production and Expenditures across Nations: A Proposal for Improving the Penn World Tables (2009)
Working Paper: Estimating Real Production and Expenditures Across Nations: A Proposal for Improving the Penn World Tables (2007)
Working Paper: Estimating Real Production and Expenditures Across Nations: A Proposal for Improving the Penn World Tables (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:4166

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().