Benford’s Law and Macroeconomic Data Quality

Author/Editor:

Jesus R Gonzalez-Garcia ; Gonzalo C Pastor Campos

Publication Date:

January 1, 2009

Electronic Access:

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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.

Series:

Working Paper No. 2009/010

Subject:

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

English

Publication Date:

January 1, 2009

ISBN/ISSN:

9781451871579/1018-5941

Stock No:

WPIEA2009010

Pages:

22

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