Benford’s Law and Macroeconomic Data Quality
January 1, 2009
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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
Pages:
22
Volume:
2009
DOI:
Issue:
010
Series:
Working Paper No. 2009/010
Stock No:
WPIEA2009010
ISBN:
9781451871579
ISSN:
1018-5941
