Economic information versus quality variation in cross-country data

John Dawson, Joseph DeJuan (), John Seater () and E. Frank Stephenson

Canadian Journal of Economics, 2001, vol. 34, issue 4, 988-1009

Abstract: Data quality in the Penn World Tables varies systematically across countries that have different growth rates and are at different stages of economic development, thus introducing measurement error correlated with variables of economic interest. We explore this problem with three examples from the literature, showing that the problem appears to be minor in growth convergence regressions but serious in estimating the effect of income volatility on growth and in a cross-country test of the Permanent Income Hypothesis. The results suggest, at the least, a need for performing appropriate sensitivity tests before drawing conclusions from analyses based on these data.

JEL-codes: E21 O47 (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (31)

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