Measurement and Interpretation of Productivity (1979) / Chapter Skim
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Comparison of Industry Output Measures in Manufacturing
Comparison of Industry Output Measures in Manufacturing
Pages 363-390
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From page 363... ...
Year-to-year and trend differences can be seen when the two series are compared. Year-to-year differences have been of concern recently because of speculation that the process of deriving constant-dollar series from the nominal value of shipments and the book value of inventories may be particularly subject to error in a period of high inflation rates and of shifts in inventory valuation methods such high rates induce.
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From page 364... ...
THE DATA SET AND TIME PERIODS To facilitate a comprehensive review and analysis of the behavior of the two series, the data set selected should be as disaggregated as possible. The FRB prepares 215 basic series for manufacturing, at a degree of detail averaging somewhat greater than 3-digit sac.
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From page 365... ...
The need for subperiod analysis reflects FRB'S use of different data sources for different time spans. To measure changes between benchmark years, which coincide with the roughly quinquennial censuses of manufactures, FRB relies in large part on 6,000 or so production indexes calculated by the Census Bureau.
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From page 366... ...
Special compilations of data made available by trade associations and other industry sources were the basis for new production levels in some industries, including fabricated structural steel and aircraft. In addition, alternative production indexes for certain portions of the textile, printing and machinery industries were compiled by the staff of the Federal Reserve Board of Governors.
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From page 367... ...
The simple average annual rate of increase of the FRB series is 7.6 percent. For the BEA series the slowest and fastest rates of growth are registered for the same two industries, although the BEA growth rate for tobacco is slightly negative and that for electronics is considerably less than the FRB index shows.
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From page 368... ...
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From page 369... ...
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From page 370... ...
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From page 371... ...
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From page 372... ...
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From page 373... ...
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From page 374... ...
Perhaps surprisingly, the results of this regression differ in important respects from the first regression. The R2 falls, but that is to be expected given the usual increase in noise as series are disaggregated, either with respect to sectoral detail or time period.
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From page 375... ...
~ ^ ANALYSIS FOR 1968-1972 Average annual rates of change for the two series between 1968 and 1972 are found in Table 1. The difference between the simple average rates of
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From page 376... ...
and, second, with respect to whether or not the industry observations are based entirely on FRB production indexes, are that neither breakdown shows significant difference from the aggregate summary given by regression 11. Regression 16 presents the results of a regression of the percentage changes in FRB on those in BEA annually for the period 1968-1972.
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From page 377... ...
The results for 1974 and to some extent for 1973 are based on completely unbenchmarked FRB data. During that time period, FRB makes considerable use of a variety of monthly series for extrapolating output.
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From page 378... ...
Between the benchmark years of 1963 and 1967, the average annual differential, unweighted, was 0.5 percentage points. Between 1967 and the partial benchmark year of 1972, the differential was slightly larger, 0.7 percentage points.
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From page 379... ...
quality adjustment, sampling, and inventory measurement, will absorb considerable resources and may well not be conclusive with respect to the trend differences. Perhaps more promising, both per se and vis-ri-vis understanding the trend differences, is to explore the second major finding why annual interpolation by FRB of its production indexes serves to put all, and even more than all, of the trend gap into years in which the FRB index is rising.
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From page 380... ...
The third major finding of this analysis relates to the behavior of the two output measures during the 1973-1974 period of double-digit inflation, years for which the FRB indexes have not been constrained to benchmarks and the mix of monthly series physical quantity, kilowatt hours, and labor hours have been used to measure output. There are large differences between the two series during this period.
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From page 381... ...
Three specific recommendations follow from the general recommendation. One appears to fall within the domain of each of three of the statistical organizations involved directly or indirectly in the calculation of the FRB and BEA output measures.
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From page 382... ...
(1977) Assessing the quality error in output measures: the case of refrigerators.
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From page 383... ...
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From page 384... ...
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From page 385... ...
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From page 386... ...
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From page 387... ...
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From page 388... ...
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From page 389... ...
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From page 390... ...
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