« Bad Monkey Memes? | Main | Optimistic Assessment of Housing from Market Participants »

Tuesday, August 23, 2005

Aggregate Activity Watch: Are We Late or Early?

"The man with two watches is never quite sure what time it is.”

Does anybody really know what time it is? Does anybody really care?  Most of you will want to skip this.  Somehow, I became interested in explaining the statistical discrepancy.  As this paper notes, it’s an important issue because the growth rates of GDP and GDI, quantities that differ by the discrepancy, can give different indications about the strength of economic growth. 

This paper looks into the sources of the statistical discrepancy.  While it doesn’t explain the systematic pattern noted here, it does talk extensively about the measurement and productivity issues including reference to Greenspan’s use of an income based productivity measure. According to this paper, most of the discrepancy arises due to mismeasurement in a few key industries, machinery and instruments, trade, and finance and insurance:

Integrating Expenditure and Income Data: What To Do With the Statistical Discrepancy?, J. Joseph Beaulieu and Eric J. Bartelsman (SSRN paper): Abstract: The purpose of this paper is to build consistent, integrated datasets to investigate whether various disaggregated data can shed light on the possible sources of the statistical discrepancy. ... We find a few “problem” industries that appear to explain most of the statistical discrepancy. Second, we explore what combination of the expenditure data and the income data seem to produce the most sensible data according to a few economic criteria. A mixture of data that do not aggregate either to GDP or to GDI appears optimal.

    Posted by on Tuesday, August 23, 2005 at 12:06 PM in Economics, Methodology | Permalink  TrackBack (0)  Comments (0)


    TrackBack URL for this entry:

    Listed below are links to weblogs that reference Aggregate Activity Watch: Are We Late or Early?:


    Feed You can follow this conversation by subscribing to the comment feed for this post.