Expanded Measures of Price and Quantity Structures Over Space and Time

University Of Pennsylvania, Philadelphia PA

Investigators

Abstract

This project continues the development of a Space-Time System of National Accounts (STSNA) covering virtually all of the countries of the world. Our STSNA, The Penn World Table (PWT) ) is still far from a perfected data source but it is fast approaching that end. The very large number of citations to PWT publications in the Social Science Citation Index makes clear that already PWT is satisfying a substantial need in the community of social science empirical researchers. The standard System of National Accounts (SNA) contains invaluable country time series of quantities and prices that make possible a variety of intertemporal comparisons within countries. However except in very special cases, the SNA entries cannot effectively be used in making comparisons across countries. The inadequacy of SNA entries for quantity comparisons between countries -- that is interspatial comparisons - is apparent immediately when it is seen that quantities, represented by expenditure outlays, are expressed in different currency units in different countries. The interspatial comparison difficulty is not simply a matter of differences in currency units. Price parities, at the heart of an STSNA, are needed to make the expenditures commensurable across countries. Even comparisons of descriptive ratios that are units-free are likely to depend on relative price ratios in the countries. For example, a country's Investment to GDP ratio derived from the SNA will reflect not only relative quantities but also the price of its investment goods relative to the prices of all other goods. Even here, price parties -- absent from the SNA -- are needed to make comparisons of the real descriptive ratio, Investment /GDP. The Penn World Table is an integration of the entries of the SNA and the prices that have been collected in many countries every five years in the benchmark studies of the International Comparison Programme. The general methodology for combining these quite different data sets is reasonably well-established, but the implementation requires constant attention. From the standpoint of the researchers and policymakers who draw on the Penn World Table, the constant updating and revising is routine but essential. The development of estimates of interesting new variables is critical, and improving the accessibility of the Table's data is important. Past National Science Foundation support made possible the expansion of the scope of the PWT from the 1980 Mark 1 version of PWT (119 countries, 10 variables, and the years 1950 and 1960-77) to the most recent Mark 5.6 version (152 countries, 29 variables and years 1950-92). This expansion of scope probably accounts for the widespread use of PWT, but primary emphasis has been put on improving the quality of the estimates. Dissemination of the Penn World Table and the full output of the 197O, 1975, 1980, 1985, and 1990 benchmark studies is at the state of the art through the Penn web site. The Table can also be extracted from a number of other web sites, one of which provides significant graphical support. Now quantity and price estimates are also available for over 900 sub-national units (states, provinces, etc.) for about 30 major countries in 1990.