Penn World Tables 5.6

About PWT Mark 5.6

PWT 5.6 differs from the original PWT 5 and PWT 5.5 in a number of respects:

  1. The estimates have been updated, for most countries to 1991 or 1992.
  2. 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' estimates.
  3. 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.
  4. 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.)
  5. 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.
  6. 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.
  7. A new file is provided of the constant price investment series that underlie the capital stock estimates (invest.prn). It shows estimates of investment in 43 countries, disaggregated into five categories, in 1985 international dollars.

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