Lessons from the Latest Data on U.S. Productivity

44 Pages Posted: 12 Dec 2010

See all articles by Jan P. A. M. Jacobs

Jan P. A. M. Jacobs

University of Groningen - Faculty of Economics and Business

Simon van Norden

HEC Montreal - Department of Finance; CIRANO; University of Montreal - Center for Interuniversity Research in Econometrics

Multiple version iconThere are 3 versions of this paper

Date Written: December 2010

Abstract

Productivity growth is carefully scrutinized by macroeconomists because it plays key roles in understanding private savings behaviour, the sources of macroeconomic shocks, the evolution of international competitiveness and the solvency of public pension systems, among other things. However, estimates of recent and expected productivity growth rates suffer from two potential problems: (i) recent estimates of growth trends are imprecise, and (ii) recently published data often undergo important revisions.

This paper documents the statistical (un)reliability of several measures of aggregate productivity growth in the U.S. by examining the extent to which they are revised over time. The authors also examine the extent to which such revisions contribute to errors in forecasts of U.S. productivity growth.

The authors find that data revisions typically cause appreciable changes in published estimates of productivity growth rates across a range of different productivity measures. Substantial revisions often occur years after the initial data release, which they argue contributes significantly to the overall uncertainty policymakers face.

This emphasizes the need for means of reducing the uncertainty facing policymakers and policies robust to uncertainty about current economic conditions.

Keywords: productivity, real-time analysis, data revisions, Greenbook projections

JEL Classification: C22, J24, O47

Suggested Citation

Jacobs, Jan P.A.M. and van Norden, Simon, Lessons from the Latest Data on U.S. Productivity (December 2010). FRB of Philadelphia Working Paper No. 11-1. Available at SSRN: https://ssrn.com/abstract=1722868 or http://dx.doi.org/10.2139/ssrn.1722868

Jan P.A.M. Jacobs (Contact Author)

University of Groningen - Faculty of Economics and Business ( email )

Postbus 72
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Netherlands

Simon Van Norden

HEC Montreal - Department of Finance ( email )

3000 Chemin de la Cote-Sainte-Catherine
Montreal, Quebec H3T 2A7
Canada
514-340-6781 (Phone)
514-340-5632 (Fax)

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CIRANO ( email )

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Montreal H3C 3J7, Quebec
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University of Montreal - Center for Interuniversity Research in Econometrics ( email )

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Montreal, Quebec H3C 3J7
Canada

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