Do Countries Falsify Economic Data Strategically? Some Evidence That They Might

Tomasz Michalski and Gilles Stoltz

The Review of Economics and Statistics, 2013, vol. 95, issue 2, 591-616

Abstract: Using Benford's law, we find evidence supporting the hypothesis that countries at times misreport their economic data strategically. We group countries with similar economic conditions and find that for countries with fixed exchange rate regimes, high negative net foreign asset positions, negative current account balances, or more vulnerable to capital flow reversals, we reject the first-digit law for the balance-of-payments data. This corroborates the intuition of a simple economic model. The main results do not seem to be driven by countries in sub-Saharan Africa or those with low institutional quality ratings. © 2013 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Keywords: capital flows; public information provision; misinformation; Benford’s Law; transparency (search for similar items in EconPapers)
JEL-codes: D82 F31 F32 F33 F34 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (44)

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