Economic policies are set and forecasts are made based on data that policymakers and forecasters have available to them. But such data are often revised — at times significantly. As a result, when policies and forecasts are viewed from the perspective of today's data, they may not seem sensible. Recognizing this problem, the Research Department at the Philadelphia Fed created a real-time data set so that economists today have the same data that were available to policymakers and forecasters in the past. In this article, Dean Croushore and Tom Stark tell how the data set was constructed, show how large the data revisions can be, illustrate how forecasting models may be sensitive to revisions, and how revisions change — sometimes significantly — the results of empirical research.

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Copyright © 2000 Federal Reserve Bank of Philadelphia. This article first appeared in Business Review - Federal Reserve Bank of Philadelphia 5 (September/October 2000): 15-27.

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