Swiss GDP revisions: A monetary policy perspective

Abstract

This paper focuses on Swiss GDP revisions and the uncertainty they generate from the point of view of monetary policy. After a description of the revisions features, we use GDP vintages to compute real-time output gaps using a production function approach. Then, with a nominal feedback rule, we assess the impact of GDP – and hence output gap – on revisions monetary policy. The main results are threefold. First, Swiss GDP revisions – similarly to those of other small economies – are large, and estimates converge slowly to their final value. Second, GDP mismeasurements clearly exacerbate the difficulty in estimating output gaps. Third, the impact of revisions on monetary policy varies over time. Via its effect on output gaps, ceteris paribus, the inaccuracy of GDP estimates risks introducing a procyclical bias in monetary policy decisions.