Comparing data sources of real GDP in purchasing power parities

Abstract

When comparing the development in international incomes, e.g. GDP per capita, the data used refer most often to incomes in real purchasing power parity (PPP) terms. The present analysis compares the most used data sources – Maddison’s Historical Statistics, Penn World Table (PWT) and OECD – and includes four countries, the USA, Japan, the UK and France. These time-series data from the respective sources might be expected to be rather identical for a specific country, but the analysis reveals that there will be some differences, probably created by methodological procedures, which can influence, e.g. the very often applied unit root and cointegration tests of income convergence.

Keywords:

• purchasing power parity
• Maddison
• PWT
• OECD
• unit roots and cointegration

JEL Classification:

• C22
• O47

Notes

¹ Bolt and van Zanden (2013).

² Feenstra et al. (2013).

³ The Eurostat-OECD Purchasing Power Parity Programme was established in the 1980s.

⁴ OECD: PPP Data, Statistics Brief, March 2002.

⁵ The World Bank produces similar GDP data in PPP terms (WDI: World Development Indicators, 2014) and the unit of measurement is ‘Constant 2011 International $’.

⁶ The data for real GDP (PPP) are generally considered nonstationary I(1) variables, although this is also a question raised in the literature, e.g. Cuestas and Garratt (2011).