Monday, February 28, 2011

1 March 2011: Is Newer Better? Penn World Table Revisions and their Impact on Growth Estimates

Arvind Subramanian
Peterson Institute for International Economics

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 this variability
is systematic; and that it is intrinsic to the methodology deployed by the PWT
to estimate growth rates. 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, thePWT methodology leads to GDP estimates that are not valued
at purchasing power parity (PPP) prices. This is surprising because the raison
d'etre 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.

Date: March 1, 2011
Time: 03:30 P.M.

Seminar Room 2,
Indian Statistical Institute Delhi Centre,
7, S. J. S. Sansanwal Marg,
New Delhi-110016 (India)


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