Revisionist History: How Data Revisions Distort Economic Policy Research

Abstract

This article describes how and why official U.S. estimates of thegrowth in real economic output and inflation are revised over time,demonstrates how big those revisions tend to be, and evaluates whetherthe revisions matter for researchers trying to understand the economy'sperformance and the contemporaneous reactions of policymakers. Theconclusion may seem obvious, but it is a point ignored by most researchers:To have a good chance of understanding how policymakers make theirdecisions, researchers must use not the final data available, butthe data available initially, when the policy decisions are actuallymade