International comparison in historical perspective: Reconstructing the 1934-1936 Benchmark purchasing power parity for Japan, Korea, and Taiwan

This article provides the first expenditure-based estimate of purchasing power parity (PPP) converters for 1934-1936 Japan, Korea, and Taiwan. We match all together 70-80 types of goods and services for private consumption, government expenditure and investment using three levels of weights derived from various expenditure surveys. We find that the 1934-1936 average prices of Korea for private consumption, investment, and government expenditure were about 0.86, 0.89, and 0.98 times that of Japan, respectively; and for Taiwan 0.84, 0.87, and 0.95, respectively. This gives the 1934-1936 Korea and Taiwan overall GDE average price levels of 0.87 and 0.86 that of Japan, respectively. Our new benchmark estimate is an improvement over existing converters based either on exchange rates or the 1990 backward projection method, which is embedded with index number biases. It provides a vital link for a long-term overview of structural change, ethnic income distribution, and the historical convergence for these three economies.