Measurement Error in Macroeconomic Data and Economics Research: Data Revisions, Gross Domestic Product, and Gross Domestic Income

Andrew C. Chang and Phillip Li ()
Additional contact information
Andrew C. Chang: https://www.federalreserve.gov/econres/andrew-c-chang.htm

No 2015-102, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: We analyze the effect of measurement error in macroeconomic data on economics research using two features of the estimates of latent US output produced by the Bureau of Economic Analysis (BEA). First, we use the fact that the BEA publishes two theoretically identical estimates of latent US output that only differ due to measurement error: the more well-known gross domestic product (GDP), which the BEA constructs using expenditure data, and gross domestic income (GDI), which the BEA constructs using income data. Second, we use BEA revisions to previously published releases of GDP and GDI. Using a sample of 23 published economics papers from top economics journals that utilize GDP as a key component of an estimated model, we assess whether using either revised GDP or GDI instead of GDP in the published paper would change reported results. We find that estimating models using revised GDP generates the same qualitative result as the original paper in all 23 cases. Estimatin g models using GDI, both with the GDI data originally available to the authors and with revised GDI, instead of GDP generates larger differences in results than those obtained with revised GDP. For 3 of 23 papers (13%), the results we obtain with GDI are qualitatively different than the original published results.

Keywords: Data Revisions; Data Vintages; Gross Domestic Product; GDP; Gross Domestic Income; GDI; Latent Output; Measurement Error; National Statistics; National Income and Product Accounts; NIPA; Real-Time Data (search for similar items in EconPapers)
Pages: 54 pages
Date: 2015-11-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.federalreserve.gov/econresdata/feds/2015/files/2015102pap.pdf Full text (application/pdf)
http://dx.doi.org/10.17016/FEDS.2015.102 DOI (application/pdf)

Related works:
Journal Article: MEASUREMENT ERROR IN MACROECONOMIC DATA AND ECONOMICS RESEARCH: DATA REVISIONS, GROSS DOMESTIC PRODUCT, AND GROSS DOMESTIC INCOME (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2015-102

DOI: 10.17016/FEDS.2015.102

Access Statistics for this paper

More papers in Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.) Contact information at EDIRC.
Bibliographic data for series maintained by Ryan Wolfslayer ; Keisha Fournillier ().