Do Transparency Initiatives Work? Assessing the Impact of the Special Data Dissemination Standard (SDDS) on Data Transparency

The Special Data Dissemination Standard (SDDS) initiative was launched by the International Monetary Fund (IMF) in 1996, to enhance the availability of timely and comprehensive macroeconomic and financial statistics based on best dissemination practices, facilitating the pursuit of sound macroeconomic policies. By joining this initiative, governments signal their commitment to disclose policy-relevant data. Has the SDDS initiative served its purpose? We provide first quantitative evidence on the effects of the SDDS data transparency initiative. We use Hollyer, Rosendorff and Vreeland's (2014) Data Transparency Index which gauges governments' ability to collect and disseminate aggregate economic data using a Bayesian item response algorithm model, which treats transparency as a latent predictor of the reporting (absence) on 240 variables collected from the World Bank's World Development Indicators. Using panel data on 120 countries during the 1996-2011 period, we find that countries complying with the SDDS initiative are associated with an increase in data transparency index after controlling for self-section bias. Our results are robust to controlling for endogeneity using instrumental variables, alternative sample, and estimation methods