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Revisions analysis of initial estimates of annual constant price GDP and its components
The pattern of bias in the revisions to the initial estimate of real growth in GDP (and its components) as published in the annual Blue Book.
This article considers the pattern of bias in the revisions to the initial estimate of real growth in GDP (and its components) as published in the annual Blue Book compared with that published in the following issue of the Blue Book a year later. The mean revision to GDP growth is analysed with respect to its size, bias and volatility. Aggregate real GDP growth and growth in the major components of GDP are examined over a period of thirty years.
The average mean revision to real annual GDP growth is 0.2 percentage points, compared to the average annual growth rate of 2 per cent of GDP over the period under consideration. In addition, the revision to the initial estimate of GDP growth was found to be statistically biased. The mean revision is low relative to average annual GDP growth for the past 30 years.
Furthermore, estimation of GDP growth has improved over the past 30 years, with the average bias of revisions to the initial estimates of GDP growth falling over this period. The 1990s has seen a fall in the mean revision to the initial estimate of GDP to an average revision of 0.1 percentage point. Of the components of GDP growth, only revisions to the initial estimates of gross operating surplus and gross fixed capital formation show statistically significant bias. Revisions to the initial estimate of all other components vary as regards the size of the average bias (and volatility) but the mean revision is not statistically significant.
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