The Enhanced Denton's Benchmarking Procedure for Extrapolation. Matrix Formulation and Practical Issues.

Statistical agencies make often recourse to benchmarking to estimate Quarterly National Accounts. One of the most used benchmarking procedure is the one based on the Proportional First Di®erences (PFD) criterion, according to the original proposal by Denton (1971). Despite its good properties for distribution, this method might give unsatisfactory results in the extrapolation of quarters of the current year. An enhanced version of the Denton PFD method has been suggested by the International Monetary Fund (IMF) to improve forecasting accuracy. In this paper we provide a matrix formalization of the enhanced solution, and analyze its properties through artificial data. Finally, we critically review the shortcut version of the enhanced method proposed by the IMF, which is currently in use in some statistical agencies.