MEASURING THE ECONOMIC PERFORMANCE OF TRANSITION ECONOMIES: SOME LESSONS FROM CHINESE EXPERIENCE

This article quantifies the comparative performance of China in several dimensions. Firstly, it shows that China's move from a command to a market economy was less abrupt and more successful than that of 29 other economies making a similar transition. Secondly, while official estimates show annual GDP growth of 9.6 percent in 1978–2003, this is reduced to 7.9 percent after adjustment for exaggeration of industrial performance and growth in non-material services. Thirdly, as the exchange rate understates China's achievement, a purchasing power parity (PPP) converter is necessary to measure comparative level of performance. Our PPP converter shows that China in 2005 was the world's second largest economy, with a GDP about 80 percent of the U.S. It is assumed that China will have overtaken the U.S. as the world's biggest economy before 2015. Until recently, the World Bank estimate of the PPP for China was close to that of Maddison, but the Bank's new estimate for 2005 shows Chinese GDP about half this level. The Bank's new estimates for China and other Asian countries are not plausible, and this paper advances several reasons for rejecting them. Finally, energy use per head of population is a good deal smaller than that of the U.S., and its total energy use for a much bigger population is likely to be somewhat smaller than that of the U.S. in 2030. However, heavy dependence on dirty coal means that it will have bigger carbon emissions than the U.S. This is a major problem as Beijing and other big cities already have severe pollution problems.     

SHORT-CUT ESTIMATES OF REAL INCOME

The United Nations International Comparisons Project (ICP) has conducted in-depth purchasing-power parity (PPP) studies of the so-called "benchmark" countries (of which there were 34 in the 1975 sample). In the absence of PPP studies of the rest of the countries in the world, the ICP team has constructed "short-cut" estimates of real income (that is, income converted from domestic currency to dollars at PPP) for the nonbenchmark countries. The idea of a "short-cut" procedure for estimating real income is to run a regression of real income on nominal income (that is, income converted from domestic currency to dollars at a market exchange rate) and other variables among the benchmark countries and then to use this regression to estimate real income for the nonbenchmark countries. The most recent ICP short-cut estimates have been based on regressions of real income on nominal income and the foreign trade ratio. The present study expands the list of candidate variables that might be included in a short-cut regression. The list includes educational attainments, the share of minerals in GDP, the trade balance, the growth of the money supply, tourist receipts, and the share of nontradables in GDP. The theory underlying the inclusion of each of these variables is discussed. Regressions are run with various combinations of these variables and some short-cut estimates of real income for 76 market economies are presented.     

中国国内生产总值核算中存在的若干问题研究

本文对中国国内生产总值核算中存在的若干主要问题进行了定量分析。分析结果表明 ,虽然这些问题对国内生产总值的结构有些影响 ,但对国内生产总值总量影响不大。也就是说 ,中国国内生产总值总量数据较好地反映了中国经济的实际发展规模     

CHINA's REFORM PERIOD ECONOMIC GROWTH: HOW RELIABLE ARE ANGUS MADDISON's ESTIMATES?

Chinese economic growth statistics are controversial. In recent years they have been challenged on technical grounds as well as on suspicions of data falsification. Angus Maddison in a 1998 OECD study goes further in that he questions China's long-run growth statistics and proceeds to provide an alternative time series. His average annual real GDP growth rate for China in the reform period (1978 through 1995) is 2.39 percentage points below the official one. Angus Maddison's revisions were subsequently incorporated into the Penn World Tables; his GDP estimates for China, thus, have found their way into numerous cross-country studies. This paper critically examines the validity of Angus Maddison's revisions to official data.     

ACCOUNTING FOR GOLD: THE SOUTH AFRICAN CASE

Real output measures in the UN System of National Accounts should be continually re-evaluated, to ensure they are providing indicators appropriate for user needs. The South African gold mining industry is an intriguing case in which the conventional output indicators are highly misleading for various analytical purposes, largely because the usual background assumptions are particularly invalid. Due to the size of the industry, its precise treatment can have sizeable effects on estimates of the growth of GDP, particularly over periods when the price of gold changes. A number of easily produced additional output measures are suggested to help analyse productivity growth and differences between the growth of real output and real incomes.     

Inequality in Pre-Industrial Europe (1260–1850): New Evidence From the Labor Share

The dynamics of economic inequality and its relationship with economic growth in the preindustrial world is increasingly attracting the attention of both economists and economic historians. In this paper, we tackle this theme by introducing new estimates of the labor share in five major European countries (England, France, Holland, Spain, and Portugal) for the period 1250–1850. Our estimates are constructed using an innovative method based on the conversion of real wages in 2011 PPP $. Overall, we find a complex pattern of evolution of the labor share with major fluctuations. Furthermore, using the inequality possibility frontier (IPF) framework, our results suggest that preindustrial Europe was characterized by a negative relationship between the extraction ratio and GDP.     

Inequality and economic growth: the role of initial income

We estimate a panel model where the relationship between inequality and GDP per capita growth depends on countries’ initial incomes. Estimates of the model show that the relationship between inequality and GDP per capita growth is significantly decreasing in countries’ initial incomes. Results from instrumental variables regressions show that in Low Income Countries transitional growth is boosted by greater income inequality. In High Income Countries inequality has a significant negative effect on transitional growth. For the median country in the world, that in the year 2015 had a PPP GDP per capita of around 10000USD, IV estimates predict that a 1 percentage point increase in the Gini coefficient decreases GDP per capita growth over a 5-year period by over 1 percentage point; the long-run effect on the level of GDP per capita is around ??5%.     

Nonlinear Exchange Rate Adjustment in the Enlarged Eurozone: Evidence and Implications for Candidate Countries

This paper sheds light on the importance of the validity of PPP hypothesis for the accessing process of the candidate countries towards EMU. The evidence of nonlinear adjustment in real exchange rates suggests the estimation of a nonlinear SETAR model. While linear half‐life estimates are biased upward (five years on average), SETAR half‐life estimates imply a faster reverting process (1.5 years on average). Moreover, we found that TPI‐based real exchange rates are more appropriate than CPI‐based real exchange rates in testing for PPP hypothesis. For the cluster of EMU countries and for the pre‐EMU period, our nonlinear model confirms stationarity for the majority of the TPI‐based real exchange rates with half‐life estimates less than a year.     

INTERNATIONAL AND INTERTEMPORAL COMPARISONS OF REAL PRODUCT IN OECD COUNTRIES A GROWTH SENSITIVITY ANALYSIS

This paper provides two new data sets for comparisons of real income in OECD countries. The first set provides adjusted real series for GDP and its components from 1960 to 1993 based on OECD 1990 purchasing power parities. The second set uses OECD PPP of different benchmark years, and interpolates these applying national price indices. Comparisons between both alternatives, Penn World Tahle Mark 5 (PWT 5) and its new version (PWT 5.6), in terms of economic growth and convergence, reveal some remarkable differences. Moreover, there are wider differences concerning the relative countries' position in GDP per capita ranking. Estimations of convergence equations based on OECD data yield a better fit than those obtained using PWT data, although there are also some significant differences between PWT 5 and PWT 5.6. Nevertheless, a very positive result is that other parameters of interest in these equations are not affected by the use of these different data sources.     

AN EXPENDITURE-BASED BILATERAL COMPARISON OF GROSS DOMESTIC PRODUCT BETWEEN CHINA AND THE UNITED STATES

This paper presents a detailed bilateral comparison of GDP between China and the U.S. with 1986 as a reference date, using the purchasing power parity (PPP) approach formulated by the United Nations International Comparison Program (ICP). An estimate of PPP over GDP made for Chinese currency in this study was used t o estimate China's dollar per capita GDP in 1986 and 1991. The specific issues in the comparisons of the housing and the comparison-resistant services categories were discussed and an approach similar to the estimation of shadow rent was exercised. The possible errors in the bilateral comparison were analyzed.     

中国宏观经济形势与政策:2003—2004年

中国经济景气在2003年继续其2002年以来的扩张倾向,全年GDP增长率将接近9%,并且将在2004年完成从经济萧条到经济繁荣的经济周期形态转换。21世纪上半叶, 中国经济将继续保持高速增长的历史趋势,核心通货膨胀率将处于较低水平。在当前经济扩张的初级阶段,中国宏观经济管理应该采取适度扩张的财政政策与货币政策,建立以增加国内投资需求为轴心的需求管理政策体系,促进国民经济持续快速增长,并且在此基础上实现增加就业、保持结构平衡和维护人民币汇率稳定的多重政策目标。     

职权结构、产权和经济停滞:中国的案例

中国在宋代(960?1279年)经历了前所未有的经济增长.据麦迪森(Maddison)的估计,当时之人均GDP从450元增加到600元(以1990年国际美元计).截然相反的是,在后来的明清两代(1368?1911年),中国的人均GDP几乎保持于600元不变.这就引发了中国经济史上一个有趣的问题??"为什么宋代中国的早期工业革命到了明清时期会变成停滞的农业经济?"我的观点是,中国的省制度在1370年代发生了变化,使得工商活动之产权执行不力,从而导致上述长期经济绩效的变迁.     

REAL GROSS DOMESTIC INCOME,RELATIVE PRICES,AND ECONOMIC PERFORMANCE ACROSS THE OECD

This paper uses OECD data to examine changes in labor productivity, real gross domestic product (GDP) and real gross domestic income (GDI), economic aggregates, and relative economic growth over time. Real GDI combines changes in production (real GDP) with a trading gain derived from relative price changes. The paper considers two sources of trading gains: the terms of trade, and the real exchange rate. For OECD countries, the terms of trade is the more important price ratio, making a contribution to real income growth that is, on average, an order of magnitude larger than the real exchange rate. Over long time periods, the most important source of real income growth is changes in production. Over shorter time horizons, however, the trading gain can make noteworthy contributions. Changes in aggregates like real private consumption, or the relative economic performance of nations, are shown to be particularly dependent on the trading gain during the large swings in resource prices that occurred post‐2002.     

NEW ESTIMATES OF THE U.S. ECONOMY'S POTENTIAL GROWTH RATE

Using an Okun's law framework, the analysis here estimates potential growth for the 1990s as measured by both fixed- and chain-weighted GDP. It then decomposes estimated potential growth rates into labor productivity growth (LPG) and labor input growth (LIG) using a regression analysis to separate secular from cyclical changes. It compares estimates of potential output and trend productivity growth for the 1990s with estimates from earlier periods. Results indicate that eliminating the substitution bias associated with fixed-weight measures of real GDP raises estimated potential GDP growth in the 1980s but lowers it in the 1990s. A slowdown in labor force growth, with little or no change in long-term productivity growth, largely accounts for the implied slowdown in potential growth.     

Testing a theoretical model of mortgage demand on UK data

This study explores whether the long-run purchasing power parity (PPP) hypothesis holds for selected real exchange rates from Turkish economy during the period 1982M1–2003M12. In addition to conventional unit root tests, five different unit root test procedures have been applied including efficient point-optimal tests, extended M tests and GLS-detrended variants of DF tests, to four monthly real exchange rate series defined in terms of both producer and consumer price indices. The countries analysed are the USA, the UK, Germany and Italy which are major trade partners of Turkey. Mixed evidence is found for the long-run PPP hypothesis when real exchange rate is defined in terms of German DM and Italian Lira. However, the empirical analysis reveals that the PPP hypothesis holds strongly in the long-run for the UK£ and US$ based real exchange rates series using either PPI or CPI. In corroboration with other studies in the literature, the bias correlated half-life estimates suggest relatively faster speeds of adjustment supporting the view that the deviations from the PPP rate dissipate rather quickly for relatively high inflation countries.     

Old and new problems in the estimation of national accounts in transiton economies1

The paper discusses the measurement and interpretation of real GDP in transition economies. It argues that the statistical offices in Eastern Europe, the Baltics and the CIS should place emphasis in the years ahead on improving the mechanism by which estimates of output, consumption, investment and foreign trade are balanced to ensure compliance with standard accounting identities. Improvements to this ‘balancing mechanism’may substantially strengthen the reliability of national accounts data and would not necessarily require a major further financial outlay for the statistical offices. In its discussion of the interpretation of real GDP data, the paper demonstrates that the use of the measured change in output at constant prices as a proxy for the evolution of ‘social welfare’may be particularly problematic in the context of transition economies.     

WHAT DO VARS TELL US ABOUT THE IMPACT OF A CREDIT SUPPLY SHOCK?

In the aftermath of the recent financial crisis, a variety of structural vector autoregression (VAR) models have been proposed to identify credit supply shocks. Using a Monte Carlo experiment, we show that the performance of these models can vary substantially, with some identification schemes producing particularly misleading results. When applied to U.S. data, the estimates from the best performing VAR models indicate, on average, that credit supply shocks that raise spreads by 10 basis points reduce GDP growth and inflation by 1% after one year. These shocks were important during the Great Recession, accounting for about half the decline in GDP growth.     

Reexamining the PPP hypothesis: A nonlinear asymmetric heterogeneous panel unit root test

In this study, we re-examine the PPP hypothesis in the light of the new developments in the unit root testing literature. The recent theoretical findings have pointed out that the real exchange rate series exhibit asymmetric nonlinear behavior. A unit root test applied to analyze the PPP hypothesis therefore, should also take into account this asymmetry inherent in the real exchange rate. Different unit root tests that consider the presence of these data features have been developed in the time series literature. However, a true attempt to test the PPP hypothesis should take a panel data approach. To this end, we propose a nonlinear heterogeneous panel unit root test where the alternative hypothesis allows for symmetric or asymmetric exponential smooth transition autoregressive nonlinearity and provide its finite sample properties. We apply our test to the real exchange rates of the 15 European Union countries against the US dollar. While the results of the linear and symmetric nonlinear heterogeneous panel unit root tests are against the PPP hypothesis, the asymmetric nonlinear heterogeneous panel test that we propose gives support for the PPP hypothesis as expected. Therefore, the conclusions drawn from the linear panel unit root tests or the nonlinear panel unit root tests that do not take asymmetry into account might be misleading.     

Study On Some Problems In Estimating China's Gross Domestic Product

This paper discusses the five main problems with current price estimates of China's Gross Domestic Product (GDP). These are the measurement of housing services, fiscal subsidies, welfare services provided within enterprises, rural industry and livestock products. The paper gives the possible ranges of error arising from problems in these areas and shows their quantitative impact on GDP estimates. The paper concludes that these problems have some impact on the structure of China's GDP, but limited impact on the total size of China's GDP. The official estimates, therefore, provide a reasonably accurate measure of the size of China's current price GDP.     

The business cycle in a financially deregulated context: Theory and evidence

This article proposes Minsky's financial instability hypothesis (FIH) as a theoretical underpinning for a three‐regime business cycles model. Further, it is argued that the development of the FIH for open, developing economies (FIH‐ODE) provides a better understanding of the performance of business cycles in these economies, particularly during the last two decades. In support of these claims, a three‐regime autoregressive Markov switching model is estimated from 1980q1 to 2000q4 to Mexico's quarterly real GDP to investigate its business cycle behaviour. The estimated probabilities of the high and medium growth regimes suggest, for example, that after the financial liberalisation programme was fully launched, in the late 1980s, the economy shifted from the regime of medium to high growth (and vice versa) swiftly, reflecting its dependence on capital flows. Furthermore, the estimated parameters indicate that the average length of the business cycle has not changed.