The Political Economy of EDP Fiscal Forecasts: An Empirical Assessment

Álvaro Pina and Nuno Venes

No 2007/23, Working Papers Department of Economics from ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa

Abstract: This paper analyses the track record of fiscal forecasts reported by 15 European countries in the context of the Excessive Deficit Procedure. For the budget balance, gross fixed capital formation (GFCF) and interest payments, we study the statistical properties of forecast errors and their politico-institutional determinants. While errors in interest and GFCF expenditure present few systematic patterns, budget balance errors are responsive to fiscal institutions and to opportunistic motivations, especially from 1999 onwards: upcoming elections induce over-optimism, whereas commitment or mixed forms of fiscal governance and numerical expenditure rules (but not deficit and debt rules) are associated to greater prudence.

Keywords: fiscal forecasting; Stability and Growth Pact; Excessive Deficit Procedure; fiscal rules (search for similar items in EconPapers)
JEL-codes: E62 H62 H68 (search for similar items in EconPapers)
Date: 2007
New Economics Papers: this item is included in nep-for, nep-mac, nep-pbe and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Related works:
Journal Article: The political economy of EDP fiscal forecasts: An empirical assessment (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ise:isegwp:wp232007

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