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

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In this paper 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 set of domestic final output, import and export prices and values for 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.
Originele taal-2English
Uitgevers.n.
Aantal pagina's31
StatusPublished - 2007

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