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Benford’s Law and Macroeconomic Data Quality

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  • Mr. Jesus R Gonzalez-Garcia
  • Mr. Gonzalo C Pastor Campos

Abstract

This paper examines the usefulness of testing the conformity of macroeconomic data with Benford's law as indicator of data quality. Most of the macroeconomic data series tested conform with Benford's law. However, questions emerge on the reliability of such tests as indicators of data quality once conformity with Benford's law is contrasted with the data quality ratings included in the data module of the Reports on the Observance of Standards and Codes (data ROSCs). Furthermore, the analysis shows that rejection of Benford's law may be unrelated to the quality of statistics, and instead may result from marked structural shifts in the data series. Hence, nonconformity with Benford's law should not be interpreted as a reliable indication of poor quality in macroeconomic data.

Suggested Citation

  • Mr. Jesus R Gonzalez-Garcia & Mr. Gonzalo C Pastor Campos, 2009. "Benford’s Law and Macroeconomic Data Quality," IMF Working Papers 2009/010, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2009/010
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    References listed on IDEAS

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    6. Hill, Theodore P. & Schürger, Klaus, 2005. "Regularity of digits and significant digits of random variables," Stochastic Processes and their Applications, Elsevier, vol. 115(10), pages 1723-1743, October.
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    Cited by:

    1. Solanki Gupta & Vivek Kumar Singh & Sumit Kumar Banshal, 2024. "Altmetric data quality analysis using Benford’s law," Scientometrics, Springer;Akadémiai Kiadó, vol. 129(7), pages 4597-4621, July.
    2. Holz, Carsten A., 2014. "The quality of China's GDP statistics," China Economic Review, Elsevier, vol. 30(C), pages 309-338.
    3. Aineas Kostas Mallios, 2023. "Manipulation in reported dividends: Empirical evidence from US banks," Economics Bulletin, AccessEcon, vol. 43(1), pages 441-461.
    4. T. Mir, 2016. "The leading digit distribution of the worldwide illicit financial flows," Quality & Quantity: International Journal of Methodology, Springer, vol. 50(1), pages 271-281, January.
    5. Huang, Yasheng & Niu, Zhiyong & Yang, Clair, 2020. "Testing firm-level data quality in China against Benford’s Law," Economics Letters, Elsevier, vol. 192(C).
    6. Koch, Christoffer & Okamura, Ken, 2020. "Benford’s Law and COVID-19 reporting," Economics Letters, Elsevier, vol. 196(C).
    7. Hao, Zhuang & Zhang, Xudong & Wang, Yuze, 2024. "Assessing the accuracy of self-reported health expenditure data: Evidence from two public surveys in China," Social Science & Medicine, Elsevier, vol. 356(C).

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