Second, bank credit is so much more volatile than GDP that there has to be something more than GDP numbers that determine bank credit. Third, and more importantly, there are multiple episodes within the test period of 2005 to 2014 when bank credit and GDP diverged. The bottom line is that bank credit is not a great variable to smell the level of GDP growth. However, there are some better smell-test variables than bank credit, such as car production. Therefore, any smell-test argument for the new GDP series based on correlation is bound to fail because the old and the new GDP series are highly correlated.

Source: Mint May 07, 2019 16:52 UTC