Do countries falsify economic data strategically? Some evidence that they might
AbstractUsing 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.
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Date of creation: 15 Jul 2011
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capital flows; public information provision; misinformation; Benford's Law; transparency;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-22 (All new papers)
- NEP-ALL-2010-11-13 (All new papers)
- NEP-IFN-2010-05-22 (International Finance)
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