Why 1990 International Geary-Khamis Dollars Cannot Be a Foundation for Reliable Long Run Comparisons of GDP

20 Pages Posted: 13 Dec 2018

See all articles by Liam Brunt

Liam Brunt

NHH - Norwegian School of Economics; Centre for Economic Policy Research (CEPR)

Antonio Fidalgo

Fresenius University of Applied Sciences

Date Written: November 29, 2018

Abstract

Using a large, new dataset of agricultural prices and quantities for many countries and regions, we create five new international Geary-Khamis pounds – for 1870, 1845, 1775, 1705, and a superior chained series. We show that estimated levels and changes in output per worker look very different – more extreme – using 1705 international pounds and 1990 international dollars, compared to all other series; growth rates appear substantially higher using 1990 international dollars. In short, out-of-sample baskets and/or prices create extremely unreliable output estimates. We also show that individual country price indices (rather than international indices) can generate substantially different estimated growth rates.

Keywords: Geary-Khamis prices, economic growth, international comparisons, price indices

JEL Classification: C43, C82, N10, N50

Suggested Citation

Brunt, Liam and Fidalgo, Antonio, Why 1990 International Geary-Khamis Dollars Cannot Be a Foundation for Reliable Long Run Comparisons of GDP (November 29, 2018). NHH Dept. of Economics Discussion Paper No. SAM/25/2018. Available at SSRN: https://ssrn.com/abstract=3292792 or http://dx.doi.org/10.2139/ssrn.3292792

Liam Brunt (Contact Author)

NHH - Norwegian School of Economics ( email )

Department of Economics
Helleveien 30
N-5035 Bergen, Hordaland
Norway

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Antonio Fidalgo

Fresenius University of Applied Sciences ( email )

Germany

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