Revisions, Rationality, and Turning Points in GDP

The results presented in this paper are in line with the conclusions of past BEA studies of GDP revisions; they supplement the findings reported in Fixler and Grimm (2002). Some evidence that the revisions are predicable was found for the current quarterly estimates of GDP and final sales, but this finding has little practical application. Information about national income is found to significantly supplement final current quarterly estimates of GDP in explaining the revisions to the latest estimates of GDP. However, there is little evidence of the predictability of revisions in GDI or national income. Finally, both the advance and final current quarterly estimates are found to do a reliable job of measuring GDP and GDI around cyclical peaks, but a less reliable job around cyclical troughs, where they tend to overstate declines and understate the beginnings of recoveries.