We describe the theory and practice of real GDP comparisons across countries and over time. Effective with version 8, the Penn World Table (PWT) will be taken over by the University of California, Davis and the University of Groningen, with continued input from Alan Heston at the University of Pennsylvania. Version 8 will expand on previous versions of PWT in three respects. First, it will distinguish real GDP on the expenditure side from real GDP on the output side, which differ by the terms of trade faced by countries. Second, it will distinguish growth rates of GDP based on national accounts data from growth rates that are benchmarked in multiple years to cross-country price data. Third, data on capital stocks will be reintroduced. Some illustrative results from PWT version 8 are discussed, including new results that show how the Penn effect is not emergent but a stable relationship over time.

/pdf/online-appendix-to-the-next-generation-of-the-penn-world-4tu31v8v90.pdf

Online Appendix to: The Next Generation of the Penn World Table*

We analyze the effect of rising Chinese import competition between 1990 and 2007 on US local labor markets, exploiting cross-market variation in import exposure stemming from initial diffe...

/pdf/the-china-syndrome-local-labor-market-effects-of-import-m7cu7qezh2.pdf

The China Syndrome: Local Labor Market Effects of Import Competition in the United States

Economists have shown that large and persistent differences in productivity levels across businesses are ubiquitous. This finding has shaped research agendas in a number of fields, including (but not limited to) macroeconomics, industrial organization, labor, and trade. This paper surveys and evaluates recent empirical work addressing the question of why businesses differ in their measured productivity levels. The causes are manifold, and differ depending on the particular setting. They include elements sourced in production practices -- and therefore over which producers have some direct control, at least in theory -- as well as from producers' external operating environments. After evaluating the current state of knowledge, I lay out what I see are the major questions that research in the area should address going forward. (JEL D24, G31, L11, M10, O30, O47)

/pdf/what-determines-productivity-2hh0dpac5x.pdf

What Determines Productivity

https://www.nber.org/system/files/working_papers/w19255/w19255.pdf

The Next Generation of the Penn World Table

羟氨苄青霉素引起大疱性类天疱疮样疹

New goods play a central role in many trade and growth models. We use detailed trade and firm-level data from India to investigate the relationship between declines in trade costs, imports of intermediate inputs, and domestic firm product scope. We estimate substantial gains from trade through access to new imported inputs. Moreover, we find that lower input tariffs account on average for 31% of the new products introduced by domestic firms. This effect is driven to a large extent by increased firm access to new input varieties that were unavailable prior to the trade liberalization.

/pdf/imported-intermediate-inputs-and-domestic-product-growth-o5wvy5exx9.pdf

Imported Intermediate Inputs and Domestic Product Growth: Evidence from India

This paper exploits India's rapid, comprehensive, and externally imposed trade reform to establish a causal link between changes in tariffs and firm productivity. Pro-competitive forces, resulting from lower tariffs on final goods, as well as access to better inputs, due to lower input tariffs, both appear to have increased firm-level productivity, with input tariffs having a larger impact. The effect was strongest in import-competing industries and industries not subject to excessive domestic regulation. While we find no evidence of a differential impact according to state-level characteristics, we observe complementarities between trade liberalization and additional industrial policy reforms.

/pdf/trade-liberalization-and-firm-productivity-the-case-of-india-1s1vzh4q1s.pdf

Trade Liberalization and Firm Productivity: The Case of India

Prices are typically used as proxies for countries' export quality. I relax this strong assumption by exploiting both price and quantity information to estimate the quality of products exported to the U.S. Higher quality is assigned to products with higher market shares conditional on price. The estimated qualities reveal substantial heterogeneity in product markets' scope for quality differentiation, or their "quality ladders.'' I use this variation to explain the heterogeneous impact of low-wage competition on U.S. manufacturing employment and output. Markets characterized by relatively shorter quality ladders are associated with larger employment and output declines resulting from low-wage competition.

The Long and Short (of) Quality Ladders

Prices are typically used as proxies for countries' export quality. I relax this strong assumption by exploiting both price and quantity information to estimate the quality of products exported to the United States. Higher quality is assigned to products with higher market shares conditional on price. The estimated qualities reveal substantial heterogeneity in product markets' scope for quality differentiation, or their "quality ladders". I use this variation to explain the heterogeneous impact of low-wage competition on US manufacturing employment and output. Markets characterized by relatively short quality ladders are associated with larger employment and output declines resulting from low-wage competition. Copyright , Wiley-Blackwell.

/pdf/the-long-and-short-of-quality-ladders-fu88ekwowr.pdf

This paper examines how prices, markups and marginal costs respond to trade liberalizaƟon. We develop a framework to esƟmate markups from producƟon data with mulƟ-product firms. This approach does not require assumpƟons on the market structure or demand curves faced by firms, nor assumpƟons on how firms allocate their inputs across products. We exploit quanƟty and price informaƟon to disentangle markups from quanƟty-based producƟvity, and then compute marginal costs by dividing observed prices by the esƟmated markups. We use India’s trade liberalizaƟon episode to examine how firms adjust these performance measures. Not surprisingly, we find that trade liberalizaƟon lowers factory-gate prices and that output tariff declines have the expected pro-compeƟƟve effects. However, the price declines are small relaƟve to the declines in marginal costs, which fall predominantly because of the input tariff liberalizaƟon. The reason is that firms offset their reducƟons in marginal costs by raising markups. Our results demonstrate substanƟal heterogeneity and variability in markups across firms and Ɵme and suggest that producers benefited relaƟve to consumers, at least immediately aŌer the reforms. Long-term gains to consumers may be higher to the extent that higher firm profits lead to new product introducƟons and growth. Indeed, firms with larger increases in markups had a higher propensity to introduce new products during this period.

/pdf/prices-markups-and-trade-reform-1vlg7yxzzr.pdf

Amit Khandelwal

Papers

Imported Intermediate Inputs and Domestic Product Growth: Evidence from India

Trade Liberalization and Firm Productivity: The Case of India

The Long and Short (of) Quality Ladders

The Long and Short (of) Quality Ladders

Prices, Markups and Trade Reform