Revisions, Rationality, and Turning Points in GDP, by Dennis J. Fixler
and Bruce T. Grimm
Prepared for the session "Tracking the Turning Points in the Economy,"
AEA meetings January 3-5, 2003, Washington D.C.
The results presented in this paper are in line with the conclusions
of past BEA studies of GDP revisions; they supplement the findings reported
in Fixler and Grimm (2002). Some evidence that the revisions are predicable
was found for the current quarterly estimates of GDP and final sales,
but this finding has little practical application. Information about national
income is found to significantly supplement final current quarterly estimates
of GDP in explaining the revisions to the latest 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, where
they tend to overstate declines and understate the beginnings of recoveries.
Last updated: February 14, 2003