UNIVERSITÄT POTSDAM - Prof. Dr. Paul JJ Welfens

Appendix: Methodological Issues in Growth Statistics
Comparing Germany / Euroland and the US there are considerable differences in statistical
procedures concerning the measurement of inflation and growth, respectively.
Since 1995 the US BEA has been using a chained Fisher quantity index for determining
real GDP. While the US approach uses current price structures – taking into account
substitution effects which tends to generate rates of growth in the year following the
base period which are smaller than those generated with traditional approaches – Germany
and most other EU countries use a Laspeyres price index. US hedonic pricing
approaches for measuring inflation reduces the US inflation rate and a fortiori raises the
real growth rate. Since Germany and most other EU countries were not using hedonic
pricing there is a bias in transatlantic growth comparisons. The overall bias from the
US use of the Fisher chain index and from hedonic pricing is in the range of 0.3-0.4
percentage points (DEUTSCHE BUNDESBANK, 2001).
Tab A1: The Tax Burden on Low and Middle Wages (Income tax plus social security
contributions in 1999 as % of labor costs)
(1) (2) (3) (4)
B 34.9 41.3 51.2 52.4
DK 14.6 31.0 40.9 40.9
D 31.1 34.5 47.0 47.0
EL 34.3 36.8 35.2 36.5
E 28.4 30.3 332.6 36.2
F 31.5 38.8 40.4 43.5
IRL -5.2 19.9 21.5 24.7
I 28.2 37.4 44.2 44.7
L 4.7 11.4 30.0 27.9
NL 21.8 34.2 40.3 41.1
A 19.0 31.8 41.7 43.7
P 22.0 26.0 30.3 32.1
FIN 27.6 40.3 43.3 45.4
S 40.9 44.5 48.8 49.7
UK 14.2 23.8 26.2 25.5
US 12.6 24.5 29.3 29.8
JP 14.7 14.7 18.3 18.4
(1) single individual with two children, earning 67 % of the APW (Average wage of production workers).
(2) married couple with two children and a single earner at the APW.
(3) single individual with no child, earning 67% of the APW.
(4) married couple with two children and two earners, with earnings split between the two partners at
100% and 67% of the APW.
Source: European Commission (2001), European Economy, Supplement A, No. 1
59