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A Michelson interferometer designed for broadband single-cycle THz pulses is used to characterize optically induced index changes in semiconductors which result in submicron changes in optical path length. The interferometric measurements are compared both to standard THz time-domain spectroscopy (THz-TDS) and differential THz-TDS based on modulation of the sample. By analyzing noise contributions in THz spectroscopy systems, it is shown that the destructive interference achieved in THz interferometry reduces both some sources of random errors as well as errors due to system drift. © 2004 American Institute of Physics.