Rationalising the Penn World Table: True Multilateral Indices for International Comparisons of Real Income

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Title: Rationalising the Penn World Table: True Multilateral Indices for International Comparisons of Real Income
Authors: Neary, J. Peter
Permanent link: http://hdl.handle.net/10197/6368
Date: 2-Apr-2004
Abstract: Real incomes are routinely compared internationally using methods which 'correct' for deviations from purchasing power parity. The most widely used of these is the Geary method which, though theoretically suspect, underlies the Penn World Table. This paper provides a theoretical foundation for the Geary method which I call the GAIA ('Geary-Allen International Accounts') System. I show that the Geary method is exact when preferences are non-homothetic Leontief and, more generally, gives a (possibly poor) approximation to the GAIA benchmark. An empirical application suggests that both it and other widely-used methods underestimate the degree of international inequality.
Type of material: Working Paper
Publisher: University College Dublin. School of Economics
Start page: 1
End page: 41
Series/Report no.: UCD Centre for Economic Research Working Paper Series; WP96/22
Keywords: GAIA ("Geary-Allen International Accounts") systemGeary methodIndex numbers of prices and real incomesPenn world tablePPP (Purchasing Power Parity)QUAIDS (Quadratic Almost Ideal Demand System)
Other versions: http://www.ucd.ie/economics/research/papers/1996/WP96.22.pdf
Language: en
Status of Item: Not peer reviewed
Appears in Collections:Economics Working Papers & Policy Papers

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