Post on 30-Dec-2015
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Benchmarking quarterly GDP to other official statistics.
Andrew Mortimer
Short-term Economic Indicators Branch
Purpose
• To demonstrate a method of constraining quarterly short-term indicators to other published statistics;
• To seek the views of SESCG on: – the need for benchmarking;– what source(s) to benchmark to;– timing
• Differences between estimates are inevitable• Actual (directly measured) values of sectoral GVA are
available from:– Regional Accounts– SABS (ABI)– Scottish Supply-use tables
• Quarterly GVA uses completely different data sources• Uses proxy measures as a short-term indicator of GVA –
in constant prices.• Is currently the only official measure of real growth in the
economy – and consequently is used for long-run analysis
Comparison of Quarterly GDP against other sources
Lagged by a number of years
Example: Hotels and catering
0.0
20.0
40.0
60.0
80.0
100.0
120.0
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
constant price
Example: Hotels and catering
0.0
20.0
40.0
60.0
80.0
100.0
120.0
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
constant price
current price
Example: Hotels and catering
0.0
20.0
40.0
60.0
80.0
100.0
120.0
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
constant price
current price
Implied deflator
Example: Hotels and catering
0.0
20.0
40.0
60.0
80.0
100.0
120.0
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Regional accounts (index)
current price
Example: Hotels and catering
0.75
0.80
0.85
0.90
0.95
1.00
1.05
1.10
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
diffs (annual)
Example: Hotels and catering
0.75
0.80
0.85
0.90
0.95
1.00
1.05
1.10
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
diffs (annual)
splined diffs
Example: Hotels and catering
0.8
20.8
40.8
60.8
80.8
100.8
120.8
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
current price
benchmarked current price
Example: Hotels and catering
0.8
20.8
40.8
60.8
80.8
100.8
120.8
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
current price
benchmarked current price
Implied deflator
Example: Hotels and catering
0.8
20.8
40.8
60.8
80.8
100.8
120.8
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
constant price
benchmarked constant price
Benefits
• Consistency between official statistics is desirable;
• Long-run growth measured using ‘actual’ GVA;
• Increased scrutiny of Regional Accounts / other official statistics;
• Focus on quarterly GDP shifts, appropriately, to its intended use – i.e. a short-term indicator of growth
Problems
• Choice of ‘gold standard’• Depending on the source constrained to, potentially large
revisions on an annual basis;• Scottish Government are involved in the quality
assurance of regional accounts and have been instrumental in highlighting problems in the statistics but QA is performed using aggregates, not source data – loss of control;
• Whether or not to anticipate and adjust for differences: what happens if systematic bias is indentified and then cancelled out by new observations (or vice-versa)?
• Some component series used in quarterly GDP are expressed in constant prices at the outset – with no established deflator that could be used to ‘inflate’ them
Timing
• Assuming that we pursue benchmarking…
• 3 choices (not mutually exclusive)– Constrain constant price estimates to double-
deflated constant price I-O tables (2-3 years);– Constrain to time-series of current price I-O
tables (1 year)– Constrain to 32 industry-level regional
accounts (immediate?).
Discussion
1. the need for benchmarking;
2. what source(s) to benchmark to;
3. Timing.