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Working Paper

Improving GDP Measurement: A Forecast Combination Perspective

S. Borağan Aruoba,
Francis X. Diebold,
Frank Schorfheide,
Jeremy Nalewaik &
Dongho Song

September 2011

WP 11-41 - Two often-divergent U.S. GDP estimates are available, a widely-used expenditure-side version GDPE, and a much less widely-used income-side version GDPI.

The authors propose and explore a "forecast combination" approach to combining them. They then put the theory to work, producing a superior combined estimate of GDP growth for the U.S., GDPC. The authors compare GDPC to GDPE and GDPI; with particular attention to behavior over the business cycle. They discuss several variations and extensions.

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