GDP Estimates: Rationality Tests and Turning Point Performance |
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Authors: | Dennis Fixler Bruce Grimm |
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Institution: | (1) Bureau of Economic Analysis, 1441 L Street NW, Washington, DC 2023, USA |
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Abstract: | The reliability of BEA’s estimates, as measured by the magnitude and pattern of revisions, is highly important to economic
policy-making and business decisions. We find evidence that the revisions are partially predicable using contemporaneously
available information for the current quarterly estimates of GDP. Information about national income is found to significantly
supplement the information found in the final current quarterly estimates of GDP in explaining the revisions to the latest-available
estimates of GDP. However, there is little evidence of the predictability of revisions in GDI or national income. Finally,
both the advance and final current quarterly estimates are found to do a reliable job of measuring GDP and GDI around cyclical
peaks, but a less reliable job around cyclical troughs, the declines preceding the troughs are overstated and the upturns
after the troughs are understated.
An earlier and somewhat expanded version of this paper, “Revisions, Rationality, and Turning Points in GDP,” was presented
at the session “Tracking the Turning Points in the Economy,” AEA meetings January 3–5 2003, Washington DC. It is available
in the “working papers” section of BEA’s web site, www.bea.gov |
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Keywords: | Business cycles Revisions Turning points |
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