Reviving the Federal Statistical System: The View From Academia
There is a tendency to think of official government statistics as unambiguous measures of economic activity. In truth, however, nearly all of the available series are based heavily on assumptions, and are sensitive to the estimation techniques used. Furthermore, many of these assumptions and estimation techniques have been refined and improved over time. Whether these underlying assumptions are reasonable and whether the refinement of assumptions over time has been useful depends crucially on the questions one is trying to answer. For example, an estimate of consumption derived from data on retail sales may be perfectly adequate for planning future production, or setting government budgets, but may be disastrous for testing a subtle economic theory. Similarly, gathering more genuine consumption data might improve our current estimates of consumption, but a series that reflects retail sales for one era and genuine consumption for another could wreak havoc when used in estimating a time-series rela
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