IDEAS home Printed from https://ideas.repec.org/a/tpr/restat/v95y2013i2p591-616.html
   My bibliography  Save this article

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

Author

Listed:
  • Tomasz Michalski

    (HEC Paris)

  • Gilles Stoltz

    (Ecole Normale Supérieure,CNRS, INRIA and HEC Paris, CNRS)

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.

Suggested Citation

  • Tomasz Michalski & Gilles Stoltz, 2013. "Do Countries Falsify Economic Data Strategically? Some Evidence That They Might," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 591-616, May.
  • Handle: RePEc:tpr:restat:v:95:y:2013:i:2:p:591-616
    as

    Download full text from publisher

    File URL: http://www.mitpressjournals.org/doi/pdf/10.1162/REST_a_00274
    File Function: link to full text PDF
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Varieties of Crises and Their Dates," Introductory Chapters,in: This Time Is Different: Eight Centuries of Financial Folly Princeton University Press.
    2. Heinemann, Frank & Illing, Gerhard, 2002. "Speculative attacks: unique equilibrium and transparency," Journal of International Economics, Elsevier, pages 429-450.
    3. George-Marios Angeletos & Christian Hellwig & Alessandro Pavan, 2006. "Signaling in a Global Game: Coordination and Policy Traps," Journal of Political Economy, University of Chicago Press, vol. 114(3), pages 452-484, June.
    4. Robert J. Aumann, 1995. "Repeated Games with Incomplete Information," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011476, January.
    5. Obstfeld, Maurice, 1986. "Rational and Self-fulfilling Balance-of-Payments Crises," American Economic Review, American Economic Association, pages 72-81.
    6. Tomasz Kamil Michalski & Guillaume Stoltz, 2010. "Do countries falsify economic date strategically? Some evidence that they do," Working Papers hal-00540794, HAL.
    7. Sbracia, Massimo & Zaghini, Andrea, 2001. "Expectations and information in second generation currency crises models," Economic Modelling, Elsevier, pages 203-222.
    8. Tomasz Michalski & Gilles Stoltz, 2013. "Do Countries Falsify Economic Data Strategically? Some Evidence That They Might," The Review of Economics and Statistics, MIT Press, pages 591-616.
    9. Roland Benabou & Guy Laroque, 1992. "Using Privileged Information to Manipulate Markets: Insiders, Gurus, and Credibility," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 921-958.
    10. Nye John & Moul Charles, 2007. "The Political Economy of Numbers: On the Application of Benford's Law to International Macroeconomic Statistics," The B.E. Journal of Macroeconomics, De Gruyter, pages 1-14.
    11. Obstfeld, Maurice, 1986. "Rational and Self-fulfilling Balance-of-Payments Crises," American Economic Review, American Economic Association, pages 72-81.
    12. Krugman, Paul, 1979. "A Model of Balance-of-Payments Crises," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 11(3), pages 311-325, August.
    13. Sandleris, Guido, 2008. "Sovereign defaults: Information, investment and credit," Journal of International Economics, Elsevier, pages 267-275.
    14. Nikola A. Tarashev, 2007. "Speculative Attacks and the Information Role of the Interest Rate," Journal of the European Economic Association, MIT Press, vol. 5(1), pages 1-36, March.
    15. Gilles Stoltz & V. Rivoirard, 2009. "Statistique en action," Post-Print hal-00494905, HAL.
    16. Tomasz Michalski & Gilles Stoltz, 2013. "Do Countries Falsify Economic Data Strategically? Some Evidence That They Might," The Review of Economics and Statistics, MIT Press, pages 591-616.
    17. Heinemann, Frank & Illing, Gerhard, 2002. "Speculative attacks: unique equilibrium and transparency," Journal of International Economics, Elsevier, pages 429-450.
    18. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-491, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gina Christelle Pieters, 2017. "Bitcoin Reveals Exchange Rate Manipulation and Detects Capital Controls," 2017 Papers ppi307, Job Market Papers.
    2. T. Mir, 2016. "The leading digit distribution of the worldwide illicit financial flows," Quality & Quantity: International Journal of Methodology, Springer, pages 271-281.
    3. Marcel Ausloos & Roy Cerqueti & Tariq A. Mir, 2017. "Data science for assessing possible tax income manipulation: The case of Italy," Papers 1709.02129, arXiv.org.
    4. Ronelle Burger & Canh Thien Dang & Trudy Owens, 2017. "Better performing NGOs do report more accurately: Evidence from investigating Ugandan NGO financial accounts," Discussion Papers 2017-10, University of Nottingham, CREDIT.
    5. T. A. Mir, 2016. "The leading digit distribution of the worldwide illicit financial flows," Quality & Quantity: International Journal of Methodology, Springer, pages 271-281.
    6. Tariq Ahmad Mir & Marcel Ausloos & Roy Cerqueti, 2014. "Benford's law predicted digit distribution of aggregated income taxes: the surprising conformity of Italian cities and regions," Papers 1410.2890, arXiv.org.
    7. Carsten A. Holz, 2014. "The Quality of China’s GDP Statistics," a/ Working Papers Series 1403, Italian Association for the Study of Economic Asymmetries, Rome (Italy).
    8. Tomasz Michalski & Gilles Stoltz, 2013. "Do Countries Falsify Economic Data Strategically? Some Evidence That They Might," The Review of Economics and Statistics, MIT Press, pages 591-616.
    9. Holz, Carsten A., 2014. "The quality of China's GDP statistics," China Economic Review, Elsevier, vol. 30(C), pages 309-338.
    10. Alberto Cavallo & Guillermo Cruces & Ricardo Perez-Truglia, 2016. "Learning from Potentially Biased Statistics," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 52(1 (Spring), pages 59-108.
    11. Tariq Ahmad Mir, 2012. "The leading digit distribution of the worldwide Illicit Financial Flows," Papers 1201.3432, arXiv.org, revised Nov 2012.
    12. Thomas Stoerk, 2015. "Statistical corruption in Beijing’s air quality data has likely ended in 2012," GRI Working Papers 194, Grantham Research Institute on Climate Change and the Environment.
    13. Alberto Cavallo & Guillermo Cruces & Ricardo Perez-Truglia, 2016. "Learning from Potentially-Biased Statistics: Household Inflation Perceptions and Expectations in Argentina," NBER Working Papers 22103, National Bureau of Economic Research, Inc.
    14. Mir, T.A., 2014. "The Benford law behavior of the religious activity data," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 408(C), pages 1-9.
    15. Camacho, Maximo & Dal Bianco, Marcos & Martinez-Martin, Jaime, 2015. "Toward a more reliable picture of the economic activity: An application to Argentina," Economics Letters, Elsevier, vol. 132(C), pages 129-132.
    16. Alberto Cavallo & Guillermo Cruces & Ricardo Perez-Truglia, 2016. "Learning from Potentially Biased Statistics," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, pages 59-108.

    More about this item

    Keywords

    capital flows; public information provision; misinformation; Benford’s Law; transparency;

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tpr:restat:v:95:y:2013:i:2:p:591-616. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kristin Waites). General contact details of provider: http://mitpress.mit.edu/journals/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.