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

Robert C. Feenstra; Alan Heston; Marcel P. Timmer; Haiyan Deng

doi:10.1162/rest.91.1.201

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

Robert C. Feenstra¹; Alan Heston²; Marcel P. Timmer³; Haiyan Deng⁴

¹ University of California, Davis · ² California University of Pennsylvania · ³ University of Groningen · ⁴ Conference Board

The Review of Economics and Statistics 2009

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.

DOI: 10.1162/rest.91.1.201
Volume: 91 (1)
Pages: 201-212
Language: en
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