Differences Across Versions of the Penn World Tables and their Effect on the Relationship between Growth and Volatility

The Penn World Tables (PWT) are an important data source for cross-country comparisons. The PWT have undergone several revisions over time and due to these revisions, some well-received evidence based on one version of the PWT may not survive when another version of the data is used. This paper explores such a possibility. Using four publicly available versions of the PWT, we first examine how countries’ output growth rates vary across the versions. We demonstrate that the magnitude of the differences is not negligible for some countries. Moreover, for 13% of all countries, the sign of the growth rates changes across the versions. We then analyze the effects of the revisions on the evidence provided by Ramey and Ramey (1995) that growth volatility has a significant negative effect on growth. We find that their conclusion is version-dependent: it is supported in some versions but not in others. JEL Codes: O11, O47, and O50.