Who shrunk China? Puzzles in the measurement of real GDP

Economic Journal

Volumn 123, Issue 573, 2013, Pages 1100-1129

  Feenstra, Robert C ^a,b,c,d,e   Ma, Hong ^a,b,c,d,e   Peter Neary, J ^a,b,c,d,e   Prasada Rao, D S ^a,b,c,d,e  

^a UNIVERSITY OF CALIFORNIA   (United States)

^b TSINGHUA UNIVERSITY   (China)

^c UNIVERSITY OF OXFORD   (United Kingdom)

^d CEPR   (United Kingdom)

^e UNIVERSITY OF QUEENSLAND   (Australia)

Author keywords

Geary Khamis and GAIA Indexes; GEKS; Gerschenkron effect; International comparisons of real income and GDP; Measurement economics; Substitution bias

Indexed keywords

CONSUMPTION BEHAVIOR; GROSS DOMESTIC PRODUCT; INTERNATIONAL COMPARISON; LIVING STANDARD; NATIONAL ECONOMY; SUBSTITUTION;

CHINA;

EID: 84890310729     PISSN: 00130133     EISSN: 14680297     Source Type: Journal    
DOI: 10.1111/ecoj.12021     Document Type: Article

References (38)

1. Afriat, S. (1967). 'The construction of utility functions from expenditure data', International Economic Review, vol. 8(1), pp. 67-77.
2. Allen, R.G.D. (1949). 'The economic theory of index numbers', Economica, vol. 16(1-2), pp. 197-203.
3. Asian Development Bank (2007). Purchasing Power Parities and Real Expenditures, ADB: Manila.
4. Balk, B.M. (2008). Price and Quantity Index Numbers: Models for Measuring Aggregate Change and Difference, New York: Cambridge University Press.
5. Balk, B.M. (2009). 'Aggregation methods in international comparisons: an evaluation', in (D.S. Prasada Rao, ed.), Purchasing Power Parities of Currencies; Recent Advances in Methods and Applications, pp. 59-85, Cheltenham: Edward Elgar.
6. Banks, J., Blundell, R. and Lewbel, A. (1997). 'Quadratic Engel curves and consumer demand', Review of Economics and Statistics, vol. 79(4), pp. 527-39.
7. Barnett, W.A., Diewert, W.E. and Zellner, A. (2009). 'Introduction to measurement with theory', Macroeconomic Dynamics, vol. 13(S2), pp. 151-68.
8. Caves, D.W., Christensen, L.R. and Diewert, W.E. (1982a). 'The economic theory of index numbers and the measurement of input, output, and productivity', Econometrica, vol. 50(6), pp. 1393-414.
9. Caves, D.W., Christensen, L.R. and Diewert, W.E. (1982b). 'Multilateral comparisons of output, input, and productivity using superlative index numbers', Economic Journal, vol. 92(410), pp. 73-86.
10. Crawford, I. and Neary, J.P. (2008). 'Testing for a reference consumer in international comparisons of living standards', American Economic Review, vol. 98(4), pp. 1731-2.
11. Deaton, A. and Heston, A. (2010). 'Understanding PPPs and PPP-based national accounts', American Economic Journal: Macroeconomics, vol. 2(4), pp. 1-35.
12. Deaton, A. and Muellbauer, J. (1980). 'An almost ideal demand system', American Economic Review, vol. 70(3), pp. 312-26.
13. Diewert, W.E. (1976). 'Exact and superlative index numbers', Journal of Econometrics, vol. 4(2), pp. 115-45.
14. Diewert, W.E. (1999). 'Axiomatic and economic approaches to international comparisons', in (A. Heston and R.E. Lipsey, eds.), International and Interarea Comparisons of Income, Output and Prices, Studies in Income and Wealth, Volume 61, pp. 13-87, Chicago, IL: The University of Chicago Press.
15. Diewert, W.E. (2010a). 'Understanding PPPs and PPP-based national accounts: comment', American Economic Journal: Macroeconomics, vol. 2(4), pp. 36-45.
16. Diewert, W.E. (2010b). 'New methodological developments for the International Comparison Program', Review of Income and Wealth, Series 56, Special Issue(1), pp. S11-31.
17. Diewert, W.E. and Morrison, C.J. (1986). 'Adjusting outputs and productivity indexes for changes in the terms of trade', Economic Journal, vol. 96(436), pp. 659-79.
18. Diewert, W.E. and Wales, T.C. (1988). 'A normalized quadratic semiflexible functional form', Journal of Econometrics, vol. 37(3), pp. 327-42.
19. Feenstra, R.C., Heston, A., Timmer, M.P. and Deng, H. (2009a). 'Estimating real production and expenditures across countries: a proposal for improving the Penn World Tables', Review of Economics and Statistics, vol. 91(1), pp. 201-12.
20. Feenstra, R.C., Inklaar, R. and Timmer, M.P. (2013). 'The next generation of the penn world table', mimeo University of California, Davis and University of Groningen.
21. Feenstra, R.C., Ma, H., Neary, J.P. and Rao, D.S.P. (2012). 'Who shrunk China? Puzzles in the measurement of real GDP', NBER Working Paper No. 17729.
22. Feenstra, R.C., Ma, H. and Rao, D.S.P. (2009b). 'Consistent comparisons of real income across countries and over time', Macroeconomic Dynamics, vol. 13(S2), pp. 169-93.
23. Feenstra, R.C. and Romalis, J. (2012). 'International prices and endogenous quality', NBER Working Paper No. 18314.
24. Geary, R.C. (1958). 'A note on the comparison of exchange rates and purchasing power between countries', Journal of the Royal Statistical Society, Series A, vol. 121(1), pp. 97-9.
25. Gerschenkron, A. (1951). A Dollar Index of Soviet Machinery Output, 192728 to 1937, Report R-197, Santa Monica, CA: Rand Corporation.
26. Heston, A. (2007). 'What can be learned about the economies of China and India from the results of purchasing power comparisons?' Paper delivered to the Conference on India and China's Role in International Trade and Finance and Global Economic governance, ICRIER, New Delhi, 6-7 December.
27. Honohan, P. (2001). 'Does PPP-adjusted data exaggerate the relative size of poor economies?', Applied Economics Letters, vol. 8(12), pp. 799-802.
28. Khamis, S.H. (1970). 'Properties and conditions for the existence of a new type of index numbers', Sankhya, Series B, vol. 32(1), pp. 81-98.
29. Khamis, S.H. (1972). 'A new system of index numbers for national and international purposes', Journal of the Royal Statistical Society, Series A, vol. 135(1), pp. 96-121.
30. Kohli, R. (2004). 'Real GDP, real domestic income, and terms-of-trade changes', Journal of International Economics, vol. 62(1), pp. 83-106.
31. Maddison, A. (2007). 'Measuring the performance of transition economics: some lessons from Chinese experience', keynote address to the Beijing Conference of IARIW and NBS, 19 September.
32. Neary, J.P. (2004). 'Rationalizing the Penn World Table: true multilateral indexes for international comparisons of real income', American Economic Review, vol. 94(5), pp. 1411-28.
33. Samuelson, P.A. (1974). 'Analytical notes on international real-income measures', Economic Journal, vol. 84(335), pp. 595-608.
34. Sanyal, K.K. and Jones, R.W. (1982). 'The theory of trade in middle products', American Economic Review, vol. 72(1), pp. 16-31.
35. Varian, H.R. (1990). 'Goodness-of-fit in optimizing models', Journal of Econometrics, vol. 46(1-2), pp. 125-40.
36. World Bank (2007). World Development Indicators, Washington, DC. (CD).
37. World Bank (2008a). World Development Indicators, Washington, DC. (CD and online).
38. World Bank (2008b). Global Purchasing Power Parities and Real Expenditures - 2005 International Comparison Program, Washington, DC: World Bank. http://siteresources.worldbank.org/ICPINT/Resources/icp-final.pdf; (last accessed: 18 March 2010).