Journal article
Rationalizing the Penn World Table: true multilateral indices for international comparisons of real income
- Abstract:
- Real incomes are routinely compared internationally using methods that "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.
- Publication status:
- Published
- Peer review status:
- Peer reviewed
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- Files:
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(Author's original, bin, 417.9KB, Terms of use)
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- Publisher copy:
- 10.1257/0002828043052286
Authors
- Publisher:
- American Economic Association
- Journal:
- American Economic Review More from this journal
- Volume:
- 94
- Issue:
- 5
- Pages:
- 1411-1428
- Publication date:
- 2004-12-01
- Edition:
- Author's Original
- DOI:
- ISSN:
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0002-8282
- Language:
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English
- Subjects:
- UUID:
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uuid:cc690ce5-bbff-4ab5-a95f-8f8f1b0902ea
- Local pid:
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ora:2113
- Deposit date:
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2008-06-19
- ARK identifier:
Terms of use
- Copyright holder:
- American Economic Association
- Copyright date:
- 2004
- Notes:
- Citation: Neary, J. P. (2004). 'Rationalizing the Penn World Table: true multilateral indices for international comparisons of real income', The American Economic Review, 94(5), 1411-1428. [Available at http://www.ingentaconnect.com/content/aea/aer]. Copyright 2004 by the American Economic Association. N.B. Professor Neary was based at University College Dublin and CEPR when this article was first published.
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