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Mismeasuring Long Run Growth: The Bias from Spliced National Accounts

Author

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  • Leandro Prados de la Escosura

    (Universidad Carlos III, CEPR and CAGE)

Abstract
Comparisons of economic performance over space and time largely depend on how statistical evidence from national accounts and historical estimates are spliced. To allow for changes in relative prices, GDP benchmark years in national accounts are periodically replaced with new and more recent ones. Thus, a homogeneous long-run GDP series requires linking different temporal segments of national accounts. The choice of the splicing procedure may result in substantial differences in GDP levels and growth, particularly as an economy undergoes deep structural transformation. An inadequate splicing may result in a serious bias in the measurement of GDP levels and growth rates. Alternative splicing solutions are discussed in this paper for the particular case of Spain, a fast growing country in the second half of the twentieth century. It is concluded that the usual linking procedure, retropolation, has serious flows as it tends to bias GDP levels upwards and, consequently, to underestimate growth rates, especially for developing countries experiencing structural change. An alternative interpolation procedure is proposed.

Suggested Citation

  • Leandro Prados de la Escosura, 2014. "Mismeasuring Long Run Growth: The Bias from Spliced National Accounts," CAGE Online Working Paper Series 202, Competitive Advantage in the Global Economy (CAGE).
    • Handle: RePEc:cge:wacage:202
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    File URL: http://www2.warwick.ac.uk/fac/soc/economics/research/centres/cage/manage/publications/202-2014_leandro_prados_de_la_escosura.pdf
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    References listed on IDEAS

    as
    1. Angel de la Fuente, 2012. "Series enlazadas de empleo y VAB para España, 1955-2010 (RegDat_Nac versión 3.1)," UFAE and IAE Working Papers 919.12, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    2. Robert C. Feenstra & Robert Inklaar & Marcel P. Timmer, 2015. "The Next Generation of the Penn World Table," American Economic Review, American Economic Association, vol. 105(10), pages 3150-3182, October.
    3. Toniolo, Gianni (ed.), 2013. "The Oxford Handbook of the Italian Economy Since Unification," OUP Catalogue, Oxford University Press, number 9780199936694.
    4. Jutta Bolt & Jan Luiten Zanden, 2014. "The Maddison Project: collaborative research on historical national accounts," Economic History Review, Economic History Society, vol. 67(3), pages 627-651, August.
    5. Angel De la Fuente, 2012. "Series enlazadas de empleo y VAB para Espana, 1955-2010," Working Papers 1225, BBVA Bank, Economic Research Department.
    6. Shirley Cassing, 1996. "Correctly Measuring Real Value Added," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 42(2), pages 195-206, June.
    7. Angel de la Fuente, 2012. "Series enlazadas de empleo y VAB para España, 1955-2010 (RegDat_Nac versión 3.0)," UFAE and IAE Working Papers 894.12, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    Full references (including those not matched with items on IDEAS)

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Where is the growth?
      by tambo0986 in NEP-HIS blog on 2015-11-23 23:21:08

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    2. Olivier Cadot & Jaime de Melo & Patrick Plane & Laurent Wagner & Martha Tesfaye Woldemichael, 2016. "Industrialisation et transformation structurelle : l’Afrique subsaharienne peut-elle se développer sans usines ?," Revue d’économie du développement, De Boeck Université, vol. 24(2), pages 19-49.
    3. Abildgren, Kim, 2014. "Far out in the tails – The historical distributions of macro-financial risk factors in Denmark," Nationaløkonomisk tidsskrift, Nationaløkonomisk Forening, vol. 2014(1), pages 1-31.
    4. André A. Hofman & Patricio Valderrama, 2021. "Long Run Economic Growth Performance In Latin America – 1820–2016," Journal of Economic Surveys, Wiley Blackwell, vol. 35(3), pages 833-869, July.

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    More about this item

    Keywords

    growth measurement; splicing GDP; historical national accounts; Spain;
    All these keywords.

    JEL classification:

    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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