The Penn effect is the economic finding associated with what became the Penn World Table that real income ratios between high and low income countries are systematically exaggerated by gross domestic product (GDP) conversion at market exchange rates. It has been a consistent econometric result for at least fifty years.
The "Balassa-Samuelson effect" is a model cited as the principal cause of the Penn effect by neo-classical economics, as well as being a synonym of "Penn effect".
Read more about Penn Effect: History, Understanding The Penn Effect, The International Development Implications
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