Shining a Light on Purchasing Power Parities

Maxim Pinkovskiy and Xavier Sala-i-Martin

American Economic Journal: Macroeconomics, 2020, vol. 12, issue 4, 71-108

Abstract: We use satellite-recorded nighttime lights as an independent benchmark of economic activity in order to generate three findings in the study of PPP-adjusted estimates of GDP. First, PPP-adjusted estimates better describe poor economies than do market exchange rate-based estimates today, although this was not the case in the late 1990s. Second, estimates of PPPs have been steadily improving from one price survey round to the next. Third, it has tended to be optimal to only use the latest price data and to revise existing PPP-adjusted estimates whenever a new price survey is released.

JEL-codes: E23 E31 F31 O11 O57 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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DOI: 10.1257/mac.20190037

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