Benford’s Law and Macroeconomic Data Quality

By Jesus R Gonzalez-Garcia, Gonzalo C Pastor Campos

January 1, 2009

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Jesus R Gonzalez-Garcia, and Gonzalo C Pastor Campos. Benford’s Law and Macroeconomic Data Quality, (USA: International Monetary Fund, 2009) accessed December 22, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Balance of payments statistics, Currencies, Economic and financial statistics, Government finance statistics, Gross fixed investment, Money, National accounts

Keywords: Balance of payments statistics, Balance of payments statistics data, Benford’s law, Central and Eastern Europe, Central Asia, Currencies, Data accuracy, Data dissemination ROSC, Data errors, Data quality, Data ROSCs, Digit, Digit law, East Asia, First-digit phenomenon, Government finance statistics, Gross fixed investment, Macroeconomic data, Middle East, Nominal GDP, Number, Statistics, Transparency, Western Hemisphere, WP

Publication Details

Pages:

22
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2009/010
Stock No:

WPIEA2009010
ISBN:

9781451871579
ISSN:

1018-5941

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