Greece has become synonymous with dodgy statistics, after its government lied about debt and deficits in order to qualify for the eurozone. If you think government pressure on statisticians is history, think again: Greece started a criminal probe of the head of the new independent statistics agency late last year, for supposedly inflating the national debt (he says he simply told the truth about Greece’s dire situation).
Spain has also repeatedly overshot its deficit goal, although less outrageously than Greece.
It turns out Spain and Greece are just part of a wider picture: economic forecasts from eurozone countries are far more likely to be influenced by wishful thinking than other countries. Even worse, Harvard researchers Jeffrey Frankel and Jesse Schreger found that all the extra optimism showed up when governments were in breach of the Maastrict treaty’s 3 per cent budget deficit rule. Today’s Short View video discusses it, but more below.