Graeme Ackland March 2010 Elasticity and Plasticity Graeme Ackland University of Edinburgh.
Why is GDP revised? Graeme Walker Head of National Accounts
-
Upload
blaze-burris -
Category
Documents
-
view
28 -
download
1
description
Transcript of Why is GDP revised? Graeme Walker Head of National Accounts
Why is GDP revised?
Graeme Walker Head of National Accounts
Royal Statistical Society: 30 May 2012
Outline
• Revisions in general• How GDP is compiled• GDP revisions • Historical perspective• Some numbers
• Levels• Growths
• Conclusions• What’s next?
Revisions to economic series
• Revisions are a fact of life for most economic series
• Or else:• The first estimate is delayed• Later information is ignored even when
it tells a different story
• Balance between accuracy and timeliness
How GDP is compiled (1)
• Three measures• Output, Expenditure and Income• Perfect statistical world – all equal
• Many sources• Monthly, Quarterly, Annual• Various timings• Monthly turnover (IoP around 6 weeks)• Annual tax returns (15 months)
How GDP is compiled (2)
• Preliminary estimate (25 days)• Accuracy and timeliness trade-off• One of the fastest in the world• Based exclusively on output, 44% data
• Second estimate (8 weeks)• Growth based on output, 83% data• Publish all measures• Some provisional expenditure sources• Limited direct income information• Use of quarterly alignment adjustments
How GDP is compiled (3)
• Quarterly National Accounts • 13 weeks• Based on output, 92% data• Similar to second estimate• Expenditure components more firm • Revisions to previous periods but not for
SU balanced years
• When 4 quarters are published• Seasonally adjusted annual constrained
to equal unadjusted annual
How GDP is compiled (4)
• Balanced supply and use• Framework for confronting differences• Levels not growths• 110 industries and products
• First balance after around 18 months• BB12 balances 2010• Not all benchmarks always received
• Second balance is usually “final” except for methodological changes
Why is GDP revised?
• Output source data revised• Expenditure and income• Revised seasonal factors• Annual chain-linking changes weights• Supply and use balancing• New methods• New international frameworks
Historical perspective
• Before 1989 – 4 measures published• Output, Expenditure and Income• Average (unweighted)• First estimate (11 weeks)• Poor service sector coverage• Construction
• q1 87 revision
• No attempt to balance the measures
1988 Autumn Statement
• Difficult to assess how economy has been performing in first half of 1988
Historical perspective
• Pickford review led to current methodology
• Improved short term surveys• Balanced measure for years up to t-2• Chain linking in 2003• Avoided major revisions with 5 year
rebasing
Some numbers: Revisions to GDP levels
• Balancing supply and use fixes annual level not quarterly growth
• Use quarterly path from output anchored to SUT levels
• Generally small apart from methods changes
The Recession: Q1 2008 to Q3 2009
Revisions to Growth
• Preliminary to QNA growth• Last 20 periods• Average -0.02 p.p: not biased• Absolute average 0.13 p.p• 5 times unchanged;10 times by 0.1 p.p• 3 times by 0.2 p.p• Q4 2009 revised by 0.3 p.p• Q1 2009 revised by -0.5 p.p (Blue Book)
• No benefit in delaying preliminary estimate from 25 days to 13 weeks
QNA to Latest
• Evidence from the recession incomplete• No evidence of bias yet• Actual revisions now negative
• +0.2 p.p for period 1998 to 2007• -0.2 p.p for period 2008 and 2009
• Absolute average revisions higher• 0.4 p.p for period 1998 to 2007• 0.7 p.p for period 2008 and 2009
• Impact of methodological changes• Continue to monitor closely
Case study: Q3 2009
• Published in Oct 09 as a fall of 0.4%• Revised to -0.3% in Nov 09
• Services sector output• -0.2% in Dec 09
• Quarterly construction data• Back to -0.3% in Feb 10
• Finance and Business services• +0.2% in BB 2011, revision of 0.5 p.p
• 0.2 p.p from new sources and SUT• 0.3 p.p from changing deflation methods
A reminder
Conclusions
• Revisions between Preliminary and QNA continue to be small and unbiased
• Subsequent revisions have been higher since 2008 but still unbiased
• Partly explained by BB11 methods changes• Impact of Supply and Use• ONS monitoring methods through the
recession• BB 2012 will provide more evidence
What’s next?
• BB 2012 – Improvements to the treatment of insurance in line with international best practice
• BB 2013 – More methods improvements; Whole of Government Accounts likely; full scope to be published later this year
• BB 2014 – New National Accounts framework (ESA10)
• Analyse revisions by reason rather than over time (feasibility)
• Continue to monitor revisions
References
Revisions policy
http://www.ons.gov.uk/ons/guide-method/method-quality/specific/economy/revisions/economic-statistics/national-accounts-revisions-policy.pdf
Detail of Supply and Use tables structure
http://www.ons.gov.uk/ons/guide-method/method-quality/specific/economy/input-output/input-output-supply-and-use-tables-structure-overview.pdf
Whole of Government Accounts
http://www.ons.gov.uk/ons/rel/psa/public-sector-finances/psf-and-wga/comparison-of-public-sector-finance-measures.pdf
Revisions triangles
http://www.ons.gov.uk/ons/publications/re-reference-tables.html?edition=tcm%3A77-240821
Improvements to the measurement of Insurance Services
http://www.ons.gov.uk/ons/guide-method/method-quality/specific/economy/national-accounts/methodology-and-articles/2011-present/blue-book-2012-insurance-services/index.html
Various National Accounts articles, including "National Accounts: A short guide"
http://www.ons.gov.uk/ons/guide-method/method-quality/specific/economy/national-accounts/methodology-and-articles/2011-present/index.html
Questions
Email: [email protected]
http://www.ons.gov.uk/ons/rel/naa1-rd/national-accounts-articles/why-is-gdp-revised-/index.html