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

By Robert C. Feenstra, Alan Heston, M. Timmer, Haiyan Deng. Review of Economics and Statistics, 2007

116 citations recorded by the source corpus.

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.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/f21ffb54d2a6fbccd85d670411d74628af3b74f8

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In Economics and Econometrics

1. Michael E. Waugh
2. David J. Donaldson
3. Costas Arkolakis
4. Bingjing Li

Citations in the corpus

• International Trade and Income Differences (2010, background): “Beginning with Mankiw, Romer, and Weil (1992)—and the competing views of Klenow and Rodriguez-Clare (1997), Hall and Jones (1999), and Parente and Prescott (2002)—the consensus is that physical and human capital accounts for only 50 percent of the variation in income per worker; the rest is unobserv”
• Online Appendix to: The Next Generation of the Penn World Table* (2015, unknown): “(B6) The system of equations (B5) and (B6) can be solved recursively and has a unique solution up to a normalization, as shown in Feenstra et al (2009).”