Empir Econ
https://doi.org/10.1007/s00181-018-1464-1
On measuring economic growth from outer space:
a single country approach
Víctor M. Guerrero
1
· Juan A. Mendoza
2
Received: 14 June 2016 / Accepted: 26 April 2018
© Springer-Verlag GmbH Germany, part of Springer Nature 2018
Abstract This article proposes a simple statistical approach to combine nighttime
light data with official national income growth figures. The suggested procedure arises
from a signal-plus-noise model for official growth along with a constant elasticity
relation between observed night lights and income. The methodology implemented in
this paper differs from the approach based on panel data for several countries at once
that uses World Bank ratings of income data quality for the countries under study
to produce an estimate of true economic growth. The new approach: (a) leads to a
relatively simple and robust statistical method based only on time series data pertaining
to the country under study and (b) does not require the use of quality ratings of official
income statistics. For illustrative purposes, some empirical applications are made for
Mexico, China and Chile. The results show that during the period of study there was
underestimation of economic growth for both Mexico and Chile, while official figures
of China over-estimated true economic growth.
The authors thank two anonymous referees and the editor of this journal for their valuable comments and
suggestions. Víctor M. Guerrero acknowledges financial support from Asociación Mexicana de Cultura,
A. C. to carry out this work.
B Juan A. Mendoza
juanmendozap@uchicago.edu
Víctor M. Guerrero
guerrero@itam.mx
1
Department of Statistics, Instituto Tecnológico Autónomo de México (ITAM), Río Hondo No. 1,
Col. Progreso Tizapán, Mexico City 01080, Mexico
2
Financial Mathematics, University of Chicago, 5727 South University Avenue, Chicago, IL 60637,
USA
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