A Modest Plea to the U.S. Government to Keep Their Data Straight

Different base year

(click for larger image)

I’m working on a pretty big project that involves gathering and manipulating quite a bit of government data.  As always, I’m stunned at the sheer quantity available, the difficulty of finding what you’re looking for, and the frustration of trying to use consistent data sets.  This is a modest plea to the U.S. government to keep their data straight. Please.

This article is heading fairly deep into the weeds, so if you need a cure for insomnia you’ve found it.

I’m trying to calculate the output gap, the ratio of real gross domestic product to potential real gross domestic product.  This should be simple and straightforward.  It’s not and the problem lies in the way real GDP is calculated.

The best way to calculate real GDP is by using the chain weighting procedure.  I could write a lot about the process, but for now let’s just say that, like every economic index in history, it requires what amounts to a base year.  If the base years for two different data series are different, the data can’t be directly compared.

In the good old days, a simple base year bundle of goods was used.  In that case it was relatively easy to change the base year.  With the advent of chain weighting, those simple procedures no longer are available.

So here’s the problem.  The year chosen as the basis for the chain-weighted real GDP is 2012.  But real potential GDP uses 2009.  And therefore I am out of luck.


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About Tony Lima

Retired after teaching economics at California State Univ., East Bay (Hayward, CA). Ph.D., economics, Stanford. Also taught MBA finance at the California University of Management and Technology. Occasionally take on a consulting project if it's interesting. Other interests include wine and technology.