Abstract
ABSTRACT Moral hazards in local governance give rise to both corruption and data misreporting. We find that the latter, which is relatively easy to uncover, can be used to detect the former. Our study, using data from Chinese prefectures between 1993 and 2013, demonstrates that the difference between the GDP growth reported by local officials and the GDP growth inferred from nightlight luminosity can predict local corruption. This approach illustrates the effectiveness of integrating remote-sensing technology, non-causal correlation, and economic reasoning to uncover bureaucratic anomalies that originate from similar mechanisms.
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