Research Spotlight: An Empirical Review of Methods for Temporal Distribution and Interpolation in the National Accounts

The Bureau of Economic Analysis (BEA) has adopted a new method for the interpolation of quarterly and monthly estimates in the national accounts. The new method uses a variant of the Denton procedure. The objective of interpolation in the national economic accounts is to use annual data to derive quarterly or monthly estimates that preserve as much as possible the short-term movement in the indicator series while still summing to a benchmark set by the annual data. Over the years, the BEA has used a variety of techniques for interpolation of the national accounts. BEA will use the following methods for routine interpolation of various series in the national income and product accounts: 1. The Denton proportional method when both annual and indicator data are available. 2. The first difference smoothing method when only annual data are available. 3. The two-step Denton proportional method when both temporal and contemporaneous constraints are present