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May 8, 2013 10:16 am
Professors Reinhart and Rogoff were embarrassed by a spreadsheet gaffe. Now statisticians within the Japanese government are smarting, after a private-sector economist pointed out errors that led them to overstate weakness in the economy during the fourth quarter last year.
In an announcement to the Japanese press club on Tuesday evening, the Cabinet Office said that a miscalculation of the value of trade in services between October and December meant that nominal gross domestic product was reported as shrinking by 0.3 per cent, rather than the true figure of 0.1 per cent.
The GDP deflator, a broader gauge of inflation than the consumer price index, was also misreported at 0.4 per cent, rather than 0.2 per cent, the Cabinet Office said.
Earlier that day, Yoshiki Shinke, chief economist at the Dai-Ichi Life Research Institute, had published a report drawing attention to the errors – the result of a failure to input correct seasonally-adjusted figures – and challenged the government to address them.
The admission comes amid concern over the integrity of official data used by investors all over the world to plot short-term trades and longer-term investments. On Wednesday, for example, China reported vigorous trade data at odds with the lacklustre readings that have emerged from neighbouring countries.
It also comes amid heightened interest in Japanese data, as prime minister Shinzo Abe attempts to overturn years of sluggish growth through aggressive monetary and fiscal stimulus.
While Japanese officials will probably be able to smooth over the effects of the slip in their growth forecasts for the world’s third-largest economy, which run on an April-April basis, the restatement may prompt private-sector economists to tweak their nominal growth projections for the first quarter and for the 2013 calendar year.
“It’s a simple, basic mistake,” said Masayuki Kichikawa, chief economist at Bank of America Merrill Lynch in Tokyo. “It hurts the credibility of the government, to some extent.”
Mr Shinke, 38, who spent a couple of years at the Cabinet Office on secondment from Dai-Ichi, said he discovered the errors late last month, while drawing up his forecasts for first-quarter growth figures due to be announced by the government next week.
He notified the government by phone on April 26, the day before the start of national “Golden Week” holidays, and followed up with another phone call during working hours the following week. By Tuesday morning he had yet to hear back.
“The government should have replied more quickly,” said Yoshimasa Maruyama, chief economist at the Itochu Economic Research Institute.
“Even if the mistake was a small one, they should have admitted it.”
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