Estimating Real Production and Expenditures across Nations: A Proposal for Improving the Penn World Tables

Robert Feenstra, Alan Heston, Marcel Timmer and Haiyan Deng
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Haiyan Deng: Conference Board, New York

The Review of Economics and Statistics, 2009, vol. 91, issue 1, 201-212

Abstract: We propose a new approach to the international comparison of real GDP, as measured from the output-side. The traditional Gary-Khamis system, which measures real GDP from the expenditure-side, is modified to include differences in the terms of trade between countries. It is shown that this system has a strictly positive solution under mild assumptions. On the basis of a sample of 151 countries in 1996, it is shown that differences between real GDP measured from the expenditure-side and output-side can be substantial, especially for small open economies. We also obtain cross-country measures of "real openness" and the terms of trade. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Date: 2009
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Related works:
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 (2007)
Working Paper: Estimating Real Production and Expenditures Across Nations: A Proposal for Improving the Penn World Tables (2004)
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