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PWT 5.6 README.DOC File
November 20, 1994
The Penn World Table (Mark 5), called PWT 5 here, was
described in "The Penn World Table (Mark 5): An Expanded Set of
International Comparisons, 1950-1988" by Robert Summers and Alan
Heston, Quarterly Journal of Economics, May 1991. The Table
itself, an annex to the article, was distributed to users on a
diskette and through a read-only file maintained by the National
Bureau of Economic Research (NBER Publications: 1050 Massachusets
Avenue, Cambridge MA 02138; (617) 868-3900)). PWT 5.6, a revised
and updated version of the Table, has been placed on this
diskette. It was prepared by Alan Heston and Robert Summers of
the University of Pennsylvania, Daniel A. Nuxoll of the Virginia
Polytechnic Institute, and Bettina Aten of the University of
Illinois at Urbana-Champaign, with the research assistance of
Valerie Mercer, James Walsh, and Bao Truong. It too is being
distributed by the NBER.
A detailed description of the construction of PWT 5.6,
like the Appendix B associated with PWT 5 is included on the
diskette in preliminary form. (It is anticipated that an updated
version of PWT 5.6 will be issued that will include the Appendix
in final form).
PWT 5.6 differs from PWT 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.
(a) Some erroneous population and labor force participation rate
estimates have been corrected.
(b) 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.
(a) 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).
(b) 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 exchangerate 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:
(a) "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.
(b) 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.