Benford’s Law and Macroeconomic Data Quality

Jesus Gonzalez-Garcia and Gonzalo Pastor Campos

No 2009/010, IMF Working Papers from International Monetary Fund

Abstract: This paper examines the usefulness of testing the conformity of macroeconomic data with Benford's law as indicator of data quality. Most of the macroeconomic data series tested conform with Benford's law. However, questions emerge on the reliability of such tests as indicators of data quality once conformity with Benford's law is contrasted with the data quality ratings included in the data module of the Reports on the Observance of Standards and Codes (data ROSCs). Furthermore, the analysis shows that rejection of Benford's law may be unrelated to the quality of statistics, and instead may result from marked structural shifts in the data series. Hence, nonconformity with Benford's law should not be interpreted as a reliable indication of poor quality in macroeconomic data.

Keywords: WP; number; digit; nominal GDP; statistics; Benford’s law; first-digit phenomenon; transparency; data quality; data errors; data dissemination ROSC; data ROSCs; balance of payments statistics data; digit law; macroeconomic data; data accuracy; Currencies; Gross fixed investment; Government finance statistics; Balance of payments statistics; East Asia; Middle East; Western Hemisphere; Central Asia; Central and Eastern Europe (search for similar items in EconPapers)
Pages: 22
Date: 2009-01-01
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Citations: View citations in EconPapers (7)

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