Fiscal Fore casting in a Federal Country: Does Space Matter?

Florian Chatagny and Christian Stettler
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Florian Chatagny: KOF Swiss Economic Institute, ETH Zurich, Switzerland, http://www.kof.ethz.ch

KOF Analysen, 2017, vol. 11, issue 4, 51-60

Abstract: Federal countries such as Switzerland are often characterized by highly decentralized and autonomous fiscal institutions at the sub-national level while the corresponding regions are strongly integrated and interrelated economically. Therefore, correlations across cantons are expected to be important and to be an issue when it comes to the accuracy of fiscal forecasts. In this paper, we assess the performance of spatial econometric models to provide one-year ahead out-of-sample forecasts of cantonal personal tax revenue and compare the performance of these models to cantonal budgetary projections and other models. Results show that we manage to outperform budget projections in 8 out of 26.

Keywords: Fiscal forecasting; Fiscal federalism; Tax revenue; Spatial panel data (search for similar items in EconPapers)
JEL-codes: C23 C53 H71 H77 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:kof:anskof:v:11:y:2017:i:4:p:51-60

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