Is newer better? Penn World Table Revisions and their impact on growth estimates
Name
Johnson_Is newer.pdf
Size
460.36 KB
Format
Adobe PDF
Checksum (MD5)
9d1d09cd13a38535a909fd62554b960d
Author(s)
Johnson, Simon
Larson, William
Papageorgiou, Chris
Subramanian, Arvind
Date Issued
March 2013
Journal
Journal of Monetary Economics
Publisher
Elsevier B.V.
Citation
Johnson, Simon, William Larson, Chris Papageorgiou, and Arvind Subramanian. “Is Newer Better? Penn World Table Revisions and Their Impact on Growth Estimates.” Journal of Monetary Economics 60, no. 2 (March 2013): 255–274.
Version
Author's final manuscript
Abstract
This paper sheds light on two problems in the Penn World Table (PWT) GDP estimates. First, we show that these estimates vary substantially across different versions of the PWT despite being derived from very similar underlying data and using almost identical methodologies; that the methodology deployed to estimate growth rates leads to systematic variability, which is greater: at higher data frequencies, for smaller countries, and the farther the estimate from the benchmark year. Moreover, this variability matters for the cross-country growth literature. While growth studies that use low frequency data remain robust to data revisions, studies that use annual data are less robust. Second, the PWT methodology leads to GDP estimates that are not valued at purchasing power parity (PPP) prices. This is surprising because the raison d’être of the PWT is to adjust national estimates of GDP by valuing output at common international (purchasing power parity [PPP]) prices so that the resulting PPP-adjusted estimates of GDP are comparable across countries. We propose an approach to address these two problems of variability and valuation.
MIT Department
Sloan School of Management
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1016/j.jmoneco.2012.10.022
