I believe this productivity puzzle turned out to be about current vs. constant prices:
TL;DR: Current productivity people mostly agree about. Historical productivity they do not. Some sources, including those in the previous comment, think Germany was more productive than the US in the past...
AFAICT those sources are using āconstant pricesā. The other sources, which show pretty much the same productivity gap over time, are using ācurrent pricesā. I worked with Claude to summarise the differences, final summary from Claude copied below.
While I agree with Claude that both methods have issues, I do want to flag one particularly odd implication of constant prices, courtesy of this Twitter user; even if a statistical agency continuously sees French GDP-per-capita as 70-75% of the US level in the present-day; the over-time graph has US and France ādivergingā by changing the valuation of historical production to reflect modern-day prices.
GDP per capita comparisons ā key methodological conclusions
Current prices (PPP) vs constant prices
PPP converts local currencies into āinternational dollarsā reflecting what money actually buys in each country, solving the cross-country price level problem at a point in time.
Constant prices anchor all figures to a base year, making real volume growth visible within a single series ā but applying a later yearās price structure to earlier output creates systematic distortion over long periods of technological change.
Goods that were expensive when produced but cheap by the base year ā semiconductors, storage, software ā get retrospectively underweighted. The World Bankās own revision history illustrates this: each successive WDI edition pushes Franceās historical GDP per capita (relative to the US) materially upward, with gaps between editions approaching 10 percentage points for the same year in the early 1990s, while the most recent observations in each edition cluster consistently around 72ā75% of US levels. That pattern ā past revised up, present unchanged ā is precisely the statistical footprint of base-year price distortion accumulating over time.
Current price PPP figures avoid this problem, but have their own distortions: sensitivity to commodity price cycles and to which ICP benchmark round is used for PPP conversion, which can substantially revise historical comparisons.
The practical implication
Constant price series are well suited to measuring volume growth within a country over time. For absolute cross-country comparisons across long periods of technological change, the WDI revision pattern suggests the distortion is not merely theoretical but, both methods have meaningful limitations and neither dominates.
I believe this productivity puzzle turned out to be about current vs. constant prices:
AFAICT those sources are using āconstant pricesā. The other sources, which show pretty much the same productivity gap over time, are using ācurrent pricesā. I worked with Claude to summarise the differences, final summary from Claude copied below.
While I agree with Claude that both methods have issues, I do want to flag one particularly odd implication of constant prices, courtesy of this Twitter user; even if a statistical agency continuously sees French GDP-per-capita as 70-75% of the US level in the present-day; the over-time graph has US and France ādivergingā by changing the valuation of historical production to reflect modern-day prices.