INTRODUCTION TO<i>MEASUREMENT WITH THEORY</i>

Barnett, William A.; Diewert, W. Erwin; Zellner, Arnold

doi:10.1017/s1365100509090233

Cited by 11 publications

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“…We include the fixed‐weight GK index, three flexible‐weight indexes – the Fisher, GEKS and CCD indexes – along with the expenditure function approaches of Neary () and Barnett et al . (). In all cases, we compare estimates for real consumption in China with and without adjustments to prices to correct for the urban bias of Chinese prices in the 2005 ICP.…”

Section: Discussionmentioning

confidence: 97%

“…Columns (6)–(8) show measures of real consumption based on the estimated AIDS expenditure function, using different reference prices: column (6) uses the Geary–Khamis reference prices; column (7) uses the GAIA reference prices; and column (8) uses every country's prices as reference and then takes the geometric mean of the results, as in Barnett et al . (). The last four rows are for the sample of 124 countries, where the last two rows report the slope coefficient (and standard error) from a regression of the natural log of each index on the log of the GEKS index.…”

Section: Real Consumptionmentioning

confidence: 97%

“…A final reference‐price calculation we make is due to a suggestion by Barnett et al . (). While accepting the advantages of basing international comparisons on the expenditure function, they point out that every country would prefer to use its own prices for such comparisons.…”

Section: Real Consumptionmentioning

confidence: 97%

“…In Section , we use all these methods, along with a recommendation by Barnett et al . (), to calculate the size of real consumption in China. In addition to showing the differences between the various index number approaches, we use a number of different sets of prices for China: the prices they reported to the 2005 ICP and our own estimates of alternative prices from several empirical models using prices from other Asian countries.…”

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confidence: 99%

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Who Shrunk China? Puzzles in the Measurement of Real GDP

Feenstra

Neary

et al. 2013

The Economic Journal

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The latest World Bank estimates of real GDP per capita for China are significantly lower than previous ones. We review possible sources of this puzzle including substitution bias in consumption, reliance on urban prices, which we estimate are higher than rural ones, and the use of an expenditure-weighted rather than an output-weighted measure of GDP. Taking all these together, we estimate that Chinese real per capita GDP was 30% higher in 2005 than the World Bank estimates. Our empirical procedures have implications more broadly for international comparisons of living standards and real GDP. ICP Asia-Pacific region. It is clear that urban bias would have impacted price data for consumption items. 4 As explained in Section 3, PWT 7.0 produced two estimates of real GDP for China: one using the 'official' ICP prices and the second using the 20% downward adjustment in prices. The same procedure is used in PWT 7.1, which differs from 7.0 based on revised national accounts data and revised prices for investment goods. PWT version 7.0 assesses the first of these reasons by providing another measure of real GDP, called 'cgdp2' and referred to as 'average GEKS-CPDW'. This calculation uses the GEKS method. For 'China version 1', per capita real GDP is $4,813 in 2005, and for 'China version 2', per capita real GDP is $5,366 in that year. Both of these estimates exceed that obtained by PWT using the GK system. Evidently, the use of GEKS by the World Bank cannot explain its low estimate for China's real GDP, which leaves the use of 'link countries'or other unknown factorsas the culprit.

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Section: Discussionmentioning

confidence: 97%

Section: Real Consumptionmentioning

confidence: 97%

Section: Real Consumptionmentioning

confidence: 97%

mentioning

confidence: 99%

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Who Shrunk China? Puzzles in the Measurement of Real GDP

Feenstra

Neary

et al. 2013

The Economic Journal

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“…A final reference-price calculation we shall make is due to a suggestion by Barnett, Diewert and Zellner (2009). To compare the real consumption of two countries j and k, they recommend that every country's price vector  p ,  =1,…,C, be used, and then take the geometric mean of the resulting comparisons.…”

Section: Expenditure Function Approachmentioning

confidence: 99%

Who Shrunk China? Puzzles in the Measurement of Real GDP

Feenstra

Neary

et al. 2012

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Rags and Riches: Relative Prices, Non-Homothetic Preferences, and Inequality in India

Almås

Kjelsrud

2017

World Development

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It is well known that consumption patterns change with income. Relative price changes would therefore affect rich and poor consumers differently. Yet, the standard price indices are not income-specific, and hence, they cannot account for such differences. In this paper, we study consumption inequality in India, while fully allowing for non-homotheticity. We show that the relative price changes during most of the period from 1993 to 2012 were pro-poor, in the sense that they favored the poor relative to the rich. As a result, we also find that conventional measures significantly overstate the rise in real consumption inequality during this period.The main lesson from our study is the importance of accounting for non-homotheticity when measuring inequality. The price index literature has, as of yet, paid relatively little attention to this. In our application, however, it turns out that the allowance for non-homotheticity is quantitatively much more important than much discussed adjustments, such as those for substitution in consumption.

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INTRODUCTION TOMEASUREMENT WITH THEORY

Cited by 11 publications

References 61 publications

Who Shrunk China? Puzzles in the Measurement of Real GDP

Who Shrunk China? Puzzles in the Measurement of Real GDP

Who Shrunk China? Puzzles in the Measurement of Real GDP

Rags and Riches: Relative Prices, Non-Homothetic Preferences, and Inequality in India

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