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

Author

Listed:
  • 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 - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique, CLASSIC - Computational Learning, Aggregation, Supervised Statistical, Inference, and Classification - DMA - Département de Mathématiques et Applications - ENS Paris - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - Inria Paris-Rocquencourt - Inria - Institut National de Recherche en Informatique et en Automatique)

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.

Suggested Citation

  • Tomasz Michalski & Gilles Stoltz, 2013. "Do countries falsify economic data strategically? Some evidence that they might," Post-Print halshs-00482106, HAL.
  • 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
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    More about this item

    Keywords

    capital flows; public information provision; misinformation; Benford's Law; transparency;
    All these keywords.

    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

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