Taking Account

Better reconciliation of the accounts, the gross domestic 1984. U.S. economic accounts product (GDP)-by-industry ac-This procedure was com-Economic measures are pro-counts, and expenditure-based pared with a pure proportional duced with varying frequen-GDP accounts with the 2002 and (PROP) adjustment procedure. cies—monthly, quarterly, or 2007 quinquennial I-O bench-The results showed that the annual, for example—and with mark accounts. authors' objectives were best different objectives. Monthly or The U.S. national accounts achieved through the procedure quarterly statistics aim to pro-system takes three approaches to based on the PFD criterion; this vide a timely picture of short-measuring GDP: production, procedure was able to smooth term activity, for example, while expenditures, and incomes. the differences observed be-annual data often provide a For the entire system to be in-tween the preliminary and the more accurate picture of me­ ternally consistent, production-benchmark data, reducing the dium-and long-term trends. based GDP (measured as total impact of the correction by dis-The most comprehensive data output less total inputs from the tributing it over all the years. are collected by the Census Bu-I-O accounts), expenditure-However, the authors also reau's economic census, which based GDP (measured as total noted that the PFD-based ad-publishes data every 5 years. final expenditures from the na­ justment didn't work as well for Theoretically, higher fre­ tional income and product ac­ a small subset of series that in­ quency measurements should be counts (NIPAs)), and gross cluded breaks in time and consistent with lower frequency domestic income (GDI) (as changes from positive to nega­ benchmarks. In practice, how-measured in the NIPAs) must all tive values. Because these move-ever, this is rarely the case. In a be reconciled. ments are difficult to preserve, statistical system that uses low-Accordingly, the objective of they were adjusted according to and high-frequency data, such as the authors was to adjust the the PROP criterion. the U.S. national economic ac­ preliminary series such that they In general, the authors counting system, observed data (1) are consistent with the quin­ showed that a constrained opti­ need to be adjusted for consis­ quennial benchmarks available, mization procedure, one that tency, satisfying both temporal (2) fulfill all the accounting rela­ minimizes a combined PFD-and contemporaneous con­ tionships for any given year, and PROP objective function, im­ straints. (3) show movements that are as proves the overall adjustment of A strong reconciliation pro-close as possible to the prelimi­ the system, minimizing the im­ cess would …