Estimating Real Production and Expenditures across Nations: A Proposal for Improving the Penn World Tables
Authors:
- Robert C . FeenstraRFRobert C . Feenstra
- Alan HestonAHAlan Heston
- Marcel P . TimmerMTMarcel P . Timmer
- Haiyan DengHDHaiyan Deng
Open Access
- 1 February 2009
- journal article
- Published by MIT Press in Review of Economics and Statistics
- Vol. 91 (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.Keywords
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