First announcements and real economic activity

Clements, M. P. ORCID: https://orcid.org/0000-0001-6329-1341 and Galvao, A. B. (2010) First announcements and real economic activity. European Economic Review, 54 (6). pp. 803-817. ISSN 0014-2921 doi: 10.1016/j.euroecorev.2009.12.010

Abstract/Summary

The recent literature suggests that first announcements of real output growth in the US have predictive power for the future course of the economy while the actual value of output growth does not. We show that this need not point to a behavioural relationship, whereby agents respond to perceptions instead of the truth, but may instead simply be a by-product of the data revision process. The revisions to the initial estimates which define the final values of the observations are shown to be key in determining any relationship between first announcements and the future course of the economy.