1. Output and productivity measurement in a US/UK comparison, 1900-1950
Output and productivity measurement in a US/UK comparison,
Reconciling sectoral benchmarks and time series
Pieter Woltjer & Herman de Jong
University of Groningen
Faculty of Economics and Business

2.
Introduction
Long-span projections criticized through confrontations with benchmarks (Ward & Devereux, 2003)
Sectoral, industry-of-origin, studies suffer from the same problems (Broadberry & Burhop, 2007)
For pre-war period some benchmarks are available to cross-check time series projections
Mostly based on quantity approach (Rostas, 1948)
Data is available to apply ICOP unit value approach (Maddison & van Ark, 1988)
Recent studies stress advantages of ICOP approach over quantity based comparisons (Fremdling et al., 2007)

3.
Outline
Examine available benchmark/time series evidence for first half 20th century for the US and the UK
Discuss differences benchmarking methods, quantity vs. unit value approach
Analyze comparative productivity using time series and shift-share
Compare benchmark and time series, is reconciliation feasible?

4. Benchmark comparisons
US productivity , 1935 (UK =100)
Industry
Rostas
de Jong & Woltjer
(quantity)
(unit value)
Food, Drink and Tobacco
207
152
Textiles and Clothing
146
174
Chemicals
213
263
Metals
200
185
Engineering
283
327
Miscellaneous
260
247
Total Manufacturing
224
Sources: Broadberry & Crafts (1992); Rostas (1948); de Jong & Woltjer (2010)

5. Long-span sectoral projections

6. Disentangling prod. growth (1)

7. Disentangling prod. growth (2)

8. Reconciliation time series and benchmarks
Reconciliation time series and benchmarks
Are the results from benchmarks and time series consistent, or transitive?
Transitivity across time and space not realistic or reasonable to impose on international comparison (Dalgaard & Sorensen, 2002)
Intransitivity error will increase if individual price movements are large (length of period) and if sectoral structure of countries under comparison differs (Szilagyi, 1984)
Sharp changes in price level compared to the base country tend to worsen intransitivity error (Aten & Heston, 2002)
Early 20th century could expect large deviations (wars, inflation)

9. Transitivity in practice (1)

10. Transitivity in practice (2)

11. Reconciling time series and benchmarks
Reconciling time series and benchmarks
Discrepancies of projections will depend largely on the accuracy of underlying benchmarks and time series
Benchmarks are affected by measurement errors (e.g. quality of products) and representativeness issues (e.g. selection bias)
ICOP approach represents substantial improvement over older quantity based international comparisons
Time series suffer from measurement errors (e.g. technological development) and international inconsistencies (differences in national accounting)
New historical national accounts rely on more systematic methodology, aids international comparisons

12. Conclusions For the moment discrepancy between both methods remains
Conclusions
For the moment discrepancy between both methods remains
We argue that there is a clear need for more (ICOP) benchmark studies for early 20th century
In addition, future research should put more emphasis on the link between benchmarks and long-span projections
Intransitivity and measurement errors can be quantified by analyzing shifts in international and inter-temporal weights
Historical national accounts should be revisited, and supplemented by new, basic, unchained time series based on price data from direct benchmark comparisons
Historical national accounts stress the comparability of methodologies and coverage over time as well as between countries