Affiliations: [a] Department of Economics, University of Pennsylvania,
3718 Locust Walk, Philadelphia, PA 19104-6297, USA. Tel.: +1 215 898 7713; Fax:
+1 215 898 4477; E-mail: {lrk,ozmucur}@ssc.upenn.edu
Correspondence:
[*]
Corresponding author
Abstract: Many scholars of the Chinese economy have concluded that official estimates of
China's GDP growth rate are too high. Journalists have popularized this view,
but we disagree. We use a method that examines several strategic indicators that
are suggested by basic social accounting principles and conclude that principal
components of these indicators reflect the movement of official estimates of the
Chinese economy. This conclusion holds whether one uses annual, quarterly or
monthly indicators. It cannot be claimed that we have proved that GDP as
officially measured is correct. No one knows the correct estimate; that is the
whole point of showing how different such estimates can be, depending on how
they are calculated, and this is true the world over. Our estimates survive
diagnostic tests, within-sample interpolations and outside-sample extrapolations
in monthly, quarterly, and annual time frames. It is reasonable to expect that
introduction of quality adjustments will justify higher estimates.
Keywords: China, growth, principal components, econometric models
