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Political Entrenchment and GDP Misreporting

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  • 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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    Cited by:

    1. John Gibson & Susan Olivia & Geua Boe‐Gibson, 2020. "Night Lights In Economics: Sources And Uses," Journal of Economic Surveys, Wiley Blackwell, vol. 34(5), pages 955-980, December.
    2. Krambia-Kapardis Maria & Stylianou Ioanna & Demetriou Salomi, 2022. "Nonlinear nexus between corruption and tourism arrivals: a global analysis," Empirical Economics, Springer, vol. 63(4), pages 1997-2024, October.
    3. Ella Hugo & David A. Savage & Friedrich Schneider & Benno Torgler, 2021. "Two sides of the same coin or two different coins? Exploring the duality of corruption in Latin America," CREMA Working Paper Series 2021-26, Center for Research in Economics, Management and the Arts (CREMA).
    4. Briviba, Andre & Frey, Bruno & Moser, Louis & Bieri, Sandro, 2024. "Governments manipulate official Statistics: Institutions matter," European Journal of Political Economy, Elsevier, vol. 82(C).
    5. repec:lic:licosd:41920 is not listed on IDEAS
    6. Benno Torgler, 2021. "The Power of Public Choice in Law and Economics," CREMA Working Paper Series 2021-04, Center for Research in Economics, Management and the Arts (CREMA).

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    More about this item

    Keywords

    Manipulation; political entrenchment; electoral cycles; trust; popular support; GDP; night lights;
    All these keywords.

    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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