International Comparison in Historical Perspective: Reconstructing the 1934-36 Benchmark Purchasing Power Parity for Japan, Korea and Taiwan

Kyoji Fukao, Debin Ma and Tangjun Yuan

Hi-Stat Discussion Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: This article provides the first expenditure approach estimate of purchasing power parity (PPP) converters for 1934-36 Japan, Korea and Taiwan. We matched all together 70 to 80 types of goods and services for private consumption, government expenditure and investment using three levels of weights derived from actual expenditure surveys. We find that the 1934-6 average prices of Korea for private consumption, investment and government expenditure were about 0.86, 0.89 and 0.98 times that of Japan respectively; and for Taiwan 0.84, 0.87 and 0.95 respectively. This gives the 1934-6 Korea and Taiwan overall GDE average price levels of 0.87 and 0.86 respectively that of Japan. Our new benchmark estimate is an improvement over existing converters based either on exchange rates or the 1990 backward projection method, which was embedded with index number biases. It provides a vital link for a long-term overview of structural change, ethnic income distribution and the historical convergence or divergence for these three economies in the past century.

Date: 2005-01
New Economics Papers: this item is included in nep-his, nep-ifn and nep-sea
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Working Paper: International Comparison in Historical Perspective: Reconstructing the 1934-36 Benchmark Purchasing Power Parity for Japan, Korea and Taiwan (2003)
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