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Constructing Internationally Comparable Real Income Aggregates by Combining Sparse Benchmark Data with Annual National Accounts Data. A State-Space Approach

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Abstract

The importance of availability of comparable real income aggregates and their components to applied economic research is highlighted by the popularity of the Penn World Tables. Any methodology designed to achieve such a task requires the combination of data from several sources. The first is purchasing power parities (PPP) data available from the International Comparisons Project roughly every five years since the 1970s. The second is national level data on a range of variables that explain the behaviour of the ratio of PPP to market exchange rates. The final source of data is the national accounts publications of different countries which include estimates of gross domestic product and various price deflators. In this paper we present a method to construct a consistent panel of comparable real incomes by specifying the problem in state-space form. We present our completed work as well as briefly indicate our work in progress.

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  • Howard E. Doran & D.S. Prasada Rao & Alicia N. Rambaldi, 2005. "Constructing Internationally Comparable Real Income Aggregates by Combining Sparse Benchmark Data with Annual National Accounts Data. A State-Space Approach," CEPA Working Papers Series WP032005, School of Economics, University of Queensland, Australia.
    • Handle: RePEc:qld:uqcepa:17
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    1. Harvey,Andrew C., 1991. "Forecasting, Structural Time Series Models and the Kalman Filter," Cambridge Books, Cambridge University Press, number 9780521405737.
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    3. Irving B. Kravis & Robert E. Lipsey, 1982. "Towards an Explanation of National Price Levels," NBER Working Papers 1034, National Bureau of Economic Research, Inc.
    4. Bergstrand, Jeffrey H, 1991. "Structural Determinants of Real Exchange Rates and National Price Levels: Some Empirical Evidence," American Economic Review, American Economic Association, vol. 81(1), pages 325-334, March.
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