Improving GDP measurement: a measurement-error perspective

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

Working Paper

Improving GDP measurement: a measurement-error perspective

Abstract: We provide a new and superior measure of U.S. GDP, obtained by applying optimal signal-extraction techniques to the (noisy) expenditure-side and income-side estimates. Its properties -- particularly as regards serial correlation -- differ markedly from those of the standard expenditure-side measure and lead to substantially-revised views regarding the properties of GDP.

Keywords: Income; Expenditures, Public; Business cycles; Recessions;