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Do countries falsify economic data strategically? Some evidence that they might

Listed author(s):
  • Tomasz Michalski

    ()

    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique)

  • Gilles Stoltz

    ()

    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique, DMA - Département de Mathématiques et Applications - ENS Paris - École normale supérieure - Paris - CNRS - Centre National de la Recherche Scientifique, CLASSIC - Computational Learning, Aggregation, Supervised Statistical, Inference, and Classification - DMA - Département de Mathématiques et Applications - ENS Paris - École normale supérieure - Paris - CNRS - Centre National de la Recherche Scientifique - ENS Paris - École normale supérieure - Paris - Inria Paris-Rocquencourt - Inria - Institut National de Recherche en Informatique et en Automatique)

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.

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File URL: https://halshs.archives-ouvertes.fr/halshs-00482106v3/document
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Paper provided by HAL in its series Post-Print with number halshs-00482106.

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Date of creation: 01 May 2013
Publication status: Published in The Review of Economics and Statistics, 2013, 95 (2), pp.591-616. <10.1162/REST_a_00274>
Handle: RePEc:hal:journl:halshs-00482106
DOI: 10.1162/REST_a_00274
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00482106v3
Contact details of provider: Web page: https://hal.archives-ouvertes.fr/

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  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. Tomasz Kamil Michalski & Guillaume Stoltz, 2010. "Do countries falsify economic data strategically? Some evidence that they do," Post-Print hal-00543490, HAL.
  3. 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.
  4. Robert J. Aumann, 1995. "Repeated Games with Incomplete Information," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011476, September.
  5. George-Marios Angeletos & Christian Hellwig & Alessandro Pavan, 2005. "Signaling in a Global Game: Coordination and Policy Traps," Discussion Papers 1400, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  6. Gilles Stoltz & V. Rivoirard, 2009. "Statistique en action," Post-Print hal-00494905, HAL.
  7. Sbracia, M. & Zaghini, A., 2000. "Expectations and Information in Second Generation Currency Crises Models," Papers 391, Banca Italia - Servizio di Studi.
  8. Guido M. Sandleris, 2005. "Sovereign Defaults: Information, Investment and Credit," 2005 Meeting Papers 21, Society for Economic Dynamics.
  9. Tomasz Michalski & Gilles Stoltz, 2013. "Do countries falsify economic data strategically? Some evidence that they might," Post-Print halshs-00482106, HAL.
  10. Obstfeld, Maurice, 1986. "Rational and Self-fulfilling Balance-of-Payments Crises," American Economic Review, American Economic Association, vol. 76(1), pages 72-81, March.
  11. 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, vol. 7(1), pages 1-14, July.
  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. 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, 03.
  14. Heinemann, Frank & Illing, Gerhard, 2002. "Speculative attacks: unique equilibrium and transparency," Journal of International Economics, Elsevier, vol. 58(2), pages 429-450, December.
  15. 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.
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