The Penn World Table (PWT) is a set of national-accounts data developed and maintained by scholars at the

University of California, Davis The University of California, Davis (UC Davis, UCD, or Davis) is a Public university, public Land-grant university, land-grant research university in Davis, California, United States. It is the northernmost of the ten campuses of the University ...

and th
Groningen Growth Development Centre
of the

University of Groningen The University of Groningen (abbreviated as UG; , abbreviated as RUG) is a Public university#Continental Europe, public research university of more than 30,000 students in the city of Groningen (city), Groningen, Netherlands. Founded in 1614, th ...

to measure

real GDP Real gross domestic product (real GDP) is a macroeconomic measure of the value of economic output adjusted for price changes (i.e. inflation or deflation). This adjustment transforms the money-value measure, nominal GDP, into an index for quantit ...

across countries and over time. Successive updates have added countries (currently 183), years (1950-2019), and data on

capital Capital and its variations may refer to: Common uses * Capital city, a municipality of primary status ** Capital region, a metropolitan region containing the capital ** List of national capitals * Capital letter, an upper-case letter Econom ...

productivity Productivity is the efficiency of production of goods or services expressed by some measure. Measurements of productivity are often expressed as a ratio of an aggregate output to a single input or an aggregate input used in a production proce ...

employment Employment is a relationship between two party (law), parties Regulation, regulating the provision of paid Labour (human activity), labour services. Usually based on a employment contract, contract, one party, the employer, which might be a cor ...

and

population Population is a set of humans or other organisms in a given region or area. Governments conduct a census to quantify the resident population size within a given jurisdiction. The term is also applied to non-human animals, microorganisms, and pl ...

. The current version of the database, version 10, thus allows for comparisons of relative

GDP per capita This is a list of countries by nominal GDP per capita. GDP per capita is the total value of a country's finished goods and services (gross domestic product) divided by its total population (per capita). Gross domestic product (GDP) per capita is ...

, as a measure of

standard of living Standard of living is the level of income, comforts and services available to an individual, community or society. A contributing factor to an individual's quality of life, standard of living is generally concerned with objective metrics outsid ...

, the

productive capacity Productive capacity is the maximum possible output (economics), output of an economy. According to the United Nations Conference on Trade and Development (UNCTAD), no agreed-upon definition of maximum output exists. UNCTAD itself proposes: "the pr ...

of economies and their productivity level. Compared to other databases, such as the

World Bank The World Bank is an international financial institution that provides loans and Grant (money), grants to the governments of Least developed countries, low- and Developing country, middle-income countries for the purposes of economic development ...

World Development Indicators World Development Indicators (WDI) is the World Bank’s premier compilation of international statistics on global development. Drawing from officially recognized sources and including national, regional, and global estimates, the WDI provides acce ...

, the time period covered is larger and there is more data that is useful for comparing productivity across countries and over time. A common practice for comparing

GDP Gross domestic product (GDP) is a monetary measure of the total market value of all the final goods and services produced and rendered in a specific time period by a country or countries. GDP is often used to measure the economic performance o ...

s across countries has been to use

exchange rate In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of ...

s. However, this assumes that this relative price – based on traded products – is representative of all relative prices in the economy, i.e. that it represents the

purchasing power parity Purchasing power parity (PPP) is a measure of the price of specific goods in different countries and is used to compare the absolute purchasing power of the countries' currency, currencies. PPP is effectively the ratio of the price of a market bask ...

(PPP) of each currency. By contrast, PWT uses detailed prices within each country for different expenditure categories, regardless of whether the output is traded internationally (say, computers) or not (say, haircuts). These detailed prices are combined into an overall relative price level, typically referred to as the country's PPP. The detailed prices used to compute PPPs are based on data published by the

as part of the

International Comparison Program The International Comparison Program (shortened ICP) is a partnership of various statistical administrations of up to 199 countries guided by the World Bank. The main partners of this program are the World Bank, IMF, UN, ADB, OECD, CISSTAT, Euro ...

(ICP). An empirical finding documented extensively by PWT is the Penn effect, the finding that real GDP is substantially understated when using exchange rates instead of PPPs in comparing GDP across countries. The most common argument to explain this finding is the Balassa-Samuelson effect, which argues that as countries grow richer, productivity increases mostly in manufacturing and other traded activities. This drives up wages and thus prices of many (non-traded) services, increasing the overall price level of the economy. The result is that poorer countries, such as China, are shown to be much richer based on PPP-converted real GDP than based on exchange-rate-converted GDP. The database gets its name from the original developers at the University of Pennsylvania, Robert Summers, Irving Kravis and Alan Heston.Robert Summers and Alan Heston (1991). "The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950-1988," Quarterly Journal of Economics, 106(2), pp. 327-368.

Notes

References

* Irving B. Kravis, Alan W. Heston, and Robert Summers, 1978. "Real GDP Per Capita for More Than One Hundred Countries," ''Economic Journal'', 88(350),
p. 215
242. * Alan Heston and Robert Summers, 1996. "International Price and Quantity Comparisons: Potentials and Pitfalls," ''The American Economic Review'', 86(2),
p. 20
24. * Simon Johnson ''et al.'', 2009. "Is Newer Better? The Penn World Table Growth Estimates

7 December, VOX.

External links

Penn World Table

Penn World Table
{{Webarchive, url=https://web.archive.org/web/20130113121349/https://pwt.sas.upenn.edu/ , date=2013-01-13 , earlier versions
International Comparison Program
National accounts Global economic indicators Welfare economics

See also

Notes

References

External links