Estimating GSP and Labor Productivity By State

19 Pages Posted: 28 Oct 2007  

Paul W. Bauer

Federal Reserve Banks - Federal Reserve Bank of Cleveland

Yoonsoo Lee

Federal Reserve Bank of Cleveland

Date Written: March 2006

Abstract

In gauging the health of state economies, arguably the two most important series to track are employment and output. While employment by state is available about three weeks after the end of a month, data on output, as measured by Gross State Product (GSP), are only available annually and with a significant lag. This Policy Discussion Paper details how more current estimates of GSP can be generated using U.S. Gross Domestic Product and personal income along with individual states' personal income. A straightforward share approach yields reasonable GSP estimates, but a more sophisticated econometric approach, at a cost of imposing more structure, yields even better ones. Both techniques are also applied to estimate nonfarm-business GSP in order to calculate a measure of labor productivity at the state level that follows as closely as possible the method used by the Bureau of Labor Statistics to calculate the national measure of labor productivity. We then briefly examine how labor productivity varies across states.

Suggested Citation

Bauer, Paul W. and Lee, Yoonsoo, Estimating GSP and Labor Productivity By State (March 2006). FRB of Cleveland Policy Discussion Paper No. 16. Available at SSRN: https://ssrn.com/abstract=1024832 or http://dx.doi.org/10.2139/ssrn.1024832

Paul W. Bauer (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Cleveland ( email )

PO Box 6387
Cleveland, OH 44101
United States
216-579-3021 (Phone)

Yoonsoo Lee

Federal Reserve Bank of Cleveland ( email )

PO Box 6387
Cleveland, OH 44101-1387
United States

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