Are the Treasury's Tax Revenue Forecasts Rational?

Barry Reilly and Robert Witt

The Manchester School of Economic & Social Studies, 1992, vol. 60, issue 4, 390-402

Abstract: This paper assesses the Treasury's tax revenue forecasts using the theory and econometric methods of rational expectations. Three categories of taxes are examined--income tax, customs and excise, and corporation tax. The hypotheses of weak and strong rationality are subjected to test in all three categories and only the income tax forecasts could be considered weakly rational. However, this set of forecasts is not found to be strongly rational. Overall, the Treasury forecasters are seen to perform poorly and this is particularly the case for the corporation tax category. Copyright 1992 by Blackwell Publishers Ltd and The Victoria University of Manchester

Date: 1992
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Persistent link: https://EconPapers.repec.org/RePEc:bla:manch2:v:60:y:1992:i:4:p:390-402

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