Estimating Real Production and Expenditures across Nations : A Proposal for Improving the Penn World Tables
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...
| Main Authors: | , , , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2007/03/7451133/estimating-real-production-expenditures-across-nations-proposal-improving-penn-world-tables-estimating-real-production-expenditures-across-nations-proposal-improving-penn-world-tables http://hdl.handle.net/10986/7243 |
| Summary: | 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. |
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