Political Entrenchment and GDP Misreporting

30 Pages Posted: 25 Jul 2019

See all articles by Ho Fai Chan

Ho Fai Chan

Queensland University of Technology - School of Economics and Finance

Bruno S. Frey

CREMA; University of Basel

Ahmed Skali

Royal Melbourne Institute of Technology

Benno Torgler

Queensland University of Technology; CREMA; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Date Written: 2019

Abstract

By examining discrepancies between officially reported GDP growth figures and the actual economic growth implied by satellite-based night time light (NTL) density, we investigate whether democracies manipulate officially reported GDP figures, and if so, whether such manipulation pays political dividends. We find that the over-reporting of growth rates does indeed precede increases in popular support, with around a 1% over-statement associated with a 0.5% increase in voter intentions for the incumbent. These results are robust to allowing the elasticity of official GDP statistics to NTL to be country specific, as well as accounting for the quality of governance, and checks and balances on executive power.

Keywords: manipulation, political entrenchment, electoral cycles, trust, popular support, GDP, night lights

JEL Classification: D720, D730, O430

Suggested Citation

Chan, Ho Fai and Frey, Bruno S. and Skali, Ahmed and Torgler, Benno, Political Entrenchment and GDP Misreporting (2019). CESifo Working Paper No. 7653. Available at SSRN: https://ssrn.com/abstract=3422234

Ho Fai Chan (Contact Author)

Queensland University of Technology - School of Economics and Finance ( email )

2 George Street
Brisbane, Queensland 4000
Australia

Bruno S. Frey

CREMA ( email )

Südstrasse 11
Zurich, CH 8008
Switzerland
+41 44 380 00 78 (Phone)

University of Basel ( email )

Peter Merian-Weg 6
Basel, 4002
Switzerland

Ahmed Skali

Royal Melbourne Institute of Technology ( email )

Level 12, 239 Bourke Street
Melbourne, Victoria 3000
Australia

HOME PAGE: http://sites.google.com/site/ahmedskali

Benno Torgler

Queensland University of Technology ( email )

GPO Box 2434
2 George Street
Brisbane, Queensland 4001
Australia

CREMA

Gellertstrasse 18
Basel
Zurich, CH 8006
Switzerland

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

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