How Much Should We Trust the Dictator's GDP Growth Estimates?

74 Pages Posted: 27 Dec 2017 Last revised: 11 Aug 2019

See all articles by Luis R. Martinez

Luis R. Martinez

University of Chicago - Harris School of Public Policy

Date Written: August 9, 2019

Abstract

I study the manipulation of GDP growth statistics in non-democracies by comparing the self-reported GDP figures to the nighttime lights recorded by satellites from outer space. I show that the night-lights elasticity of GDP is systematically larger in more authoritarian regimes. This autocracy gradient in the elasticity is not explained by potential differences in a large set of country characteristics, including economic structure, urbanization, corruption, state capacity or levels of development. The gradient is larger when countries have a stronger incentive to exaggerate economic performance or when the institutions that constrain the manipulation of official statistics are weaker. I estimate that the most authoritarian regimes inflate yearly GDP growth rates by a factor of 1.15-1.3 on average. I show that correcting for data manipulation provides a more nuanced view on the economic success of non-democracies in recent years and affects our understanding of the effect of foreign aid on growth.

Keywords: GDP, nighttime lights, economic growth, democracy

JEL Classification: C82, D73, E01, H11, O47

Suggested Citation

Martinez, Luis, How Much Should We Trust the Dictator's GDP Growth Estimates? (August 9, 2019). Available at SSRN: https://ssrn.com/abstract=3093296 or http://dx.doi.org/10.2139/ssrn.3093296

Luis Martinez (Contact Author)

University of Chicago - Harris School of Public Policy ( email )

1155 East 60th Street
Chicago, IL 60637
United States

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