Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/95588
Authors: 
Almås, Ingvild
Year of Publication: 
2008
Series/Report no.: 
LIS Working Paper Series 473
Abstract: 
Purchasing power adjusted incomes applied in cross-country comparisons are measured with bias. In this paper, we estimate the purchasing power parity (PPP) bias in Penn World Table incomes and provide corrected real incomes. The bias is substantial and systematic: the poorer is a country, the more its income tends to be overestimated. Consequently, international income inequality is substantially underestimated. Our methodological contribution is to exploit the analogies between PPP bias and the bias in consumer price index (CPI) numbers. The PPP bias, and consequently real incomes, is measured by estimating Engel curves for food, which is an established method of measuring CPI bias.
JEL: 
D1
E31
F01
Document Type: 
Working Paper
Appears in Collections:

Files in This Item:
File
Size
325.91 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.