Rationalizing the Penn world table: True multilateral indices for international comparisons of real income

• 成果类型: Article
• 署名作者: Neary, JP
• 署名单位: University College Dublin; Centre for Economic Policy Research - UK
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/0002828043052286
• 发表日期: 2004
• 页码: 1411-1428
• 关键词: PURCHASING POWER; engel curves; numbers; prices; output; input

摘要

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.