On Functions, Quality, and Timeliness of Economic Information
"The flow of production and use of economic information consists of the collection and processing of primary data, the reporting of the resulting measures, and the transformation of the latter into signals or messages that presumably aid knowledge or decision-making. Each stage contributes to the return and costs, quality and errors of the information. The processes involved on the micro and macro levels show important similarities and interact ions. The uncertainty about economic information increases with the probability of error in the underlying data and their processing and interpretation. Many errors cannot be promptly detected and eliminated but can be gradually reduced over time, as attested by the revisions in economic statistics. This paper presents substantial evidence on the accuracy of provisional estimates of quarterly and monthly changes in eighteen important variables. Measures of several aspects of data quality and of average lags of data release and signal detection are provided for a collection of 110 widely used economic indicators. These materials help identify the location of the more serious measurement errors by variable and period, and they show that informational lags of five and more months are frequent. The errors and lags of information may lead to apparently "systematic" but not readily detectable and removable errors in expectations. This is likely to happen, in particular, in times of great surprises and shocks when measurement of short-term changes in the economy is most difficult and current signals are often misread. Some illustrations are drawn from the events of 1970-75"--NBER website.
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accuracy of provisional aggregate aggregate supply analysis Asset autocorrelated average behavior benchmark revisions Buiter Bureau of Economic business cycle changes CM CM coefficients Column component consistent Corporate costs coverage Cr9dit cyclical indicators data and measures data refer data release lag decisions economic agents economic information economic measures Economic Research economic time series effects evidence expectations Figure Floating Exchange Rates forecasts ft ft hypothesis incomplete inflation information lag inventories investment Jeffrey Sachs Lawrence H m.nth M.nthly macroeconomic Market Martin Feldstein mean square error messages micro microdata money supply monthly series months nominal nonprobability sampling optimal pric9 primary data problems processing production quarter quarterly series rates rational rational expectations real GNP regression relative reporting Rudiger Dornbusch scores Shiskin signal detection lags Significant smoothness statistical adequacy systematic errors tests theory Timeliness Ul ft Ul Ul uncertainty underlying data variables Willem H