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Comments on: Changing the past: New GDP numbers http://www.tvhe.co.nz/2012/05/16/changing-the-past-new-gdp-numbers/ The Visible Hand in Economics Tue, 15 May 2012 20:58:43 +0000 hourly 1 https://wordpress.org/?v=6.9.4 By: Matt Nolan http://www.tvhe.co.nz/2012/05/16/changing-the-past-new-gdp-numbers/#comment-37893 Tue, 15 May 2012 20:58:43 +0000 http://www.tvhe.co.nz/?p=6961#comment-37893 In reply to Matthew.

I would note that it is only GDP that has been revised down – not growth in consumer prices.  As a result, a downward revision doesn’t immediately tell us that the output gap is larger.  Instead, potential output could be lower.

This is why, when looking at output gaps in real time, I prefer to look at CPI and UR figures instead of GDP figures – GDP is constantly revised, and a small open economy suffers from external shocks to potential all the time.

The fact that current economic momentum is a bit weaker than previously estimated might make a rate cut slightly more likely.

 

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By: Matthew http://www.tvhe.co.nz/2012/05/16/changing-the-past-new-gdp-numbers/#comment-37891 Tue, 15 May 2012 20:43:02 +0000 http://www.tvhe.co.nz/?p=6961#comment-37891 Do you agree with this guy that the revisions tell us there is more scope to cut rates?

http://ricardianambivalence.com/2012/05/15/snail-flys-past-kiwi-on-the-gdp-revisions/

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