On the Extrapolation with the Denton Proportional Benchmarking Method

June 1, 2012

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Marco Marini, and Tommaso Di Fonzo. On the Extrapolation with the Denton Proportional Benchmarking Method, (USA: International Monetary Fund, 2012) accessed December 26, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Statistical offices have often recourse to benchmarking methods for compiling quarterly national accounts (QNA). Benchmarking methods employ quarterly indicator series (i) to distribute annual, more reliable series of national accounts and (ii) to extrapolate the most recent quarters not yet covered by annual benchmarks. The Proportional First Differences (PFD) benchmarking method proposed by Denton (1971) is a widely used solution for distribution, but in extrapolation it may suffer when the movements in the indicator series do not match consistently the movements in the target annual benchmarks. For this reason, an enhanced formula for extrapolation was recommended by the IMF’s Quarterly National Accounts Manual: Concepts, Data Sources, and Compilation (2001). We discuss the rationale behind this technique, and propose a matrix formulation of it. In addition, we present applications of the enhanced formula to artificial and real-life benchmarking examples showing how the extrapolations for the most recent quarters can be improved.

Subject: Industrial production, Manufacturing, National accounts

Keywords: Bi ratio, WP

Publication Details

Pages:

21
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2012/169
Stock No:

WPIEA2012169
ISBN:

9781475505177
ISSN:

1018-5941

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