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Political Entrenchment and GDP Misreporting

Author

Listed:
  • Ho Fai Chan
  • Bruno S. Frey
  • Ahmed Skali
  • Benno Torgler

Abstract

By examining discrepancies between officially reported GDP growth figures and the actual economic growth implied by satellite-based night time light (NTL) density, we investigate whether democracies manipulate officially reported GDP figures, and if so, whether such manipulation pays political dividends. We find that the over-reporting of growth rates does indeed precede increases in popular support, with around a 1% over-statement associated with a 0.5% increase in voter intentions for the incumbent. These results are robust to allowing the elasticity of official GDP statistics to NTL to be country specific, as well as accounting for the quality of governance, and checks and balances on executive power.

Suggested Citation

  • Ho Fai Chan & Bruno S. Frey & Ahmed Skali & Benno Torgler, 2019. "Political Entrenchment and GDP Misreporting," CREMA Working Paper Series 2019-02, Center for Research in Economics, Management and the Arts (CREMA).
  • Handle: RePEc:cra:wpaper:2019-02
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    References listed on IDEAS

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    Cited by:

    1. John Gibson & Susan Olivia & Geua Boe-Gibson, 2020. "Night Lights in Economics: Sources and Uses," LICOS Discussion Papers 41920, LICOS - Centre for Institutions and Economic Performance, KU Leuven.

    More about this item

    Keywords

    Manipulation; political entrenchment; electoral cycles; trust; popular support; GDP; night lights;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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