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Fact and Fiction in EU-Governmental Economic Data

Author

Listed:
  • Rauch Bernhard

    (University of Regensburg, Regensburg, Germany)

  • Göttsche Max

    (University of Regensburg, Regensburg, Germany)

  • Engel Stefan

    (Catholic University of Eichstätt-Ingolstadt, Eichstätt, Germany)

  • Brähler Gernot

    (Ilmenau University of Technology, Ilmenau, Germany)

Abstract

To detect manipulations or fraud in accounting data, auditors have successfully used Benford’s law as part of their fraud detection processes. Benford’s law proposes a distribution for first digits of numbers in naturally occurring data. Government accounting and statistics are similar in nature to financial accounting. In the European Union (EU), there is pressure to comply with the Stability and Growth Pact criteria. Therefore, like firms, governments might try to make their economic situation seem better. In this paper, we use a Benford test to investigate the quality of macroeconomic data relevant to the deficit criteria reported to Eurostat by the EU member states. We find that the data reported by Greece shows the greatest deviation from Benford’s law among all euro states.

Suggested Citation

  • Rauch Bernhard & Göttsche Max & Engel Stefan & Brähler Gernot, 2011. "Fact and Fiction in EU-Governmental Economic Data," German Economic Review, De Gruyter, vol. 12(3), pages 243-255, August.
    • Handle: RePEc:bpj:germec:v:12:y:2011:i:3:p:243-255
    DOI: 10.1111/j.1468-0475.2011.00542.x
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    Citations

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    Cited by:

    1. Huang, Yasheng & Niu, Zhiyong & Yang, Clair, 2020. "Testing firm-level data quality in China against Benford’s Law," Economics Letters, Elsevier, vol. 192(C).
    2. Bernhard Rauch & Max G�ttsche & Stephan Langenegger, 2014. "Detecting Problems in Military Expenditure Data Using Digital Analysis," Defence and Peace Economics, Taylor & Francis Journals, vol. 25(2), pages 97-111, April.
    3. Timothy C. Irwin, 2015. "Defining The Government'S Debt And Deficit," Journal of Economic Surveys, Wiley Blackwell, vol. 29(4), pages 711-732, September.
    4. Mayo, Robert, 2015. "Hidden Risk: Detecting Fraud in Chinese Banks’ Non-performing Loan Data," MPRA Paper 98435, University Library of Munich, Germany.

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