Improving GDP measurement: a forecast combination perspective

Aruoba, S. Boragan; Diebold, Francis X.; Nalewaik, Jeremy J.; Schorfheide, Frank; Song, Dongho

Working Paper

Improving GDP measurement: a forecast combination perspective

Abstract: Two often-divergent U.S. GDP estimates are available, a widely-used expenditure-side version GDPE, and a much less widely-used income-side version GDI . The authors propose and explore a \"forecast combination\" approach to combining them. They then put the theory to work, producing a superior combined estimate of GDP growth for the U.S., GDPC. The authors compare GDPC to GDPE and GDPI , with particular attention to behavior over the business cycle. They discuss several variations and extensions.

Keywords: Business cycles; Recessions; Expenditures, Public;