Is the Stabilization of the Postwar Economy a Figment of the Data

Abstract

This study of output data for the periods 1866-1914 and 1947-82 shows that much of the apparent stabilization of the postwar economy is an artifact of the way the historical data are constructed. When the methods used to form the historical index of industrial production are replicated for the postwar era, the consistent data show less than half the stabilization apparent in modern data. The excess volatility of thehistorical data is due to the overrepresentation of materials and intermediate goods in the early indexes of total industrial production. Copyright 1986 by American Economic Association.