About PWT Mark 5.6
PWT 5.6 differs from the original PWT 5 and PWT 5.5 in a number of respects:
The estimates have been updated, for most countries to 1991
PWT 5.6 makes use of more data from International
Comparison Programme benchmark studies than did PWT 5, and
this has led to significant changes in some countries'
Errors in the entries of PWT 5 have been corrected.
- Some erroneous population and labor force participation
rate estimates have been corrected.
- The principal correction involves the stated Investment
and Government shares of the United States. PWT 5 was
based on the multi-country national accounts data set
maintained by the World Bank. Unfortunately, at the
time of PWT 5, the Bank's source for the OECD countries
provided United States numbers which did not meet the
SNA standard convention of transferring the Public
Investment component of Government to Investment.
(Only the United States part of the Bank's archive was
seriously affected by this disability.) As a
consequence, PWT 5's time series of US Investment and
Government shares were incorrect. The former (i and
ci) were understated and the latter (g and cg) were
overstated. Unfortunately, this had a number of
ramifications. Of course, US capital stock estimates
were all understated. More than that, the Price Levels
for Investment and Government (PI and PG) were
misstated---by common factors---for all countries.
(Happily, the relative Price Levels of all countries
other than the US can still be compared directly.) PWT
5.6 is based on US national accounts data in which
Public Investment has been appropriately transferred.
Some changes in methodology have affected the estimates.
- Reconciliation adjustments for countries that have
participated in more than one benchmark study: In PWT 5
adjustments were made to both the benchmark estimates
and the growth rates of the major components of GDP to
eliminate inconsistencies. Component growth rates are
not adjusted in PWT 5.6; only the level estimates from
the benchmarks are adjusted. (The component growth
rates in PWT 5.6 remain the same as the corresponding
national accounts growth rates).
- The valuation of countries' Net Foreign Balance (NFB)
in international prices: In all previous versions of
the Penn World Table (PWT 1 through PWT 5), a country's
NFB was converted into dollars using the country's
market exchange rate. In PWT 5.6. the conversion is
made using the country's overall purchasing power
parity. The conversion procedure based on the
exchange- rate leads to comparative GDP levels and
component share estimates which are not base-country
invariant. (That is, if a country other than the
United States was chosen as the base country, a
different relationship between the countries' GDPs
would be obtained. The United States would no longer
simply be a numeraire country.)
The way in which the Price Levels of Consumption,
Investment, and Government (PC, PI, and PG in Columns 14,
15, and 16) are reported has been changed. In PWT 5.6 the
price levels are simply the corresponding price parities
with respect to the United States divided by the exchange
rate. In PWT 5, the price level was expressed as the same
ratio, but divided by the corresponding ratio for the
United States. (For technical reasons, the component price
parities for the United States are not equal to one, even
though the PPP for overall GDP is.) Thus, the present
price levels are expressed relative to the world as a whole
(to "Earthia") rather than the United States.
Two new variables have been added:
- "Standard of Living" [(Private plus Public Consumption)
minus (Military Expenditures)] per capita is designed
to measure current material wellbeing more explicitly
than GDP per capita.
- The percent of transportation equipment to total
non-residential capital stock. This variable provides
more detail on the character of the capital stock.
A new file is provided of the constant price investment
series that underlie the capital stock estimates
It shows estimates of investment in 43
countries, disaggregated into five categories, in 1985
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