Accessible Requires Authentication Published by De Gruyter November 30, 2019

Fact and Fiction in EU-Governmental Economic Data

Bernhard Rauch, Max Göttsche, Stefan Engel and Gernot Brähler
From the journal German Economic Review

Abstract

To detect manipulations or fraud in accounting data, auditors have successfully used Benford’s law as part of their fraud detection processes. Benford’s law proposes a distribution for first digits of numbers in naturally occurring data. Government accounting and statistics are similar in nature to financial accounting. In the European Union (EU), there is pressure to comply with the Stability and Growth Pact criteria. Therefore, like firms, governments might try to make their economic situation seem better. In this paper, we use a Benford test to investigate the quality of macroeconomic data relevant to the deficit criteria reported to Eurostat by the EU member states. We find that the data reported by Greece shows the greatest deviation from Benford’s law among all euro states.

Published Online: 2019-11-30
Published in Print: 2011-08-01

© 2019 by Walter de Gruyter Berlin/Boston