Working Paper: NBER ID: w17729
Authors: Robert C. Feenstra; Hong Ma; J. Peter Neary; D.S. Prasada Rao
Abstract: The latest World Bank estimates of real GDP per capita for China are significantly lower than previous ones. We review possible sources of this puzzle and conclude that it reflects a combination of factors, including substitution bias in consumption, reliance on urban prices which we estimate are higher than rural ones, and the use of an expenditure-weighted rather than an output-weighted measure of GDP. Taking all these together, we estimate that real per-capita GDP in China was 50% higher relative to the U.S. in 2005 than the World Bank estimates.
Keywords: Real GDP; China; Measurement; International Comparisons
JEL Codes: E01
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| urban price bias (R29) | GDP estimates (E20) |
| substitution bias in consumption (D11) | GDP estimates (E20) |
| expenditure-weighted measure (C43) | GDP estimates (E20) |
| adjusting for urban vs rural price differentials (R29) | real per capita GDP (P24) |
| adjusting for prices (P22) | real GDP per capita (O49) |
| output-side measurement (C67) | GDP estimates (E20) |
| real GDP in China (P24) | real GDP in the US (N12) |