Are Preliminary Data Of Output Growth And Inflation Reliable Predictors?

Abstract

The hypothesis that the preliminary announcements of output growth and inflation are reliable predictors of the revised data is tested for 1969.1-1991.4 and 1969.1-2000.4. Our test results indicate that these preliminary announcements are unbiased predictors. The output growth revision is orthogonal to the past revisions of both output growth and inflation available at the time of announcement. The inflation revision, however, fails to be orthogonal to such past revisions.  While unbiased, the lack of orthogonality of the inflation announcement suggests room for improvement.