Scandinavian Working Papers in Economics

Discussion Paper Series in Economics,
Norwegian School of Economics, Department of Economics

No 25/2018: Why 1990 international Geary-Khamis dollars cannot be a foundation for reliable long run comparisons of GDP

Liam Brunt () and Antonio Fidalgo
Additional contact information
Liam Brunt: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Economics, Helleveien 30, N-5045 Bergen, Norway
Antonio Fidalgo: Fresenius University of Applied Sciences

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-codes: C43; C82; N10; N50

14 pages, November 28, 2018

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