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Does fiscal responsibility matter? Evidence from public and private forecasters in Italy

Laura Carabotta (), Elisenda Paluzie and Raul Ramos

International Journal of Forecasting, 2017, vol. 33, issue 3, 694-706

Abstract: Nowadays, fiscal forecasts are a centerpiece of macroeconomic policy decisions, particularly in highly indebted European Union countries such as Italy. The Stability and Convergence Programs and the new Fiscal Compact seem to have improved fiscal responsibility, but have they facilitated a greater accuracy of fiscal forecasters? We have compiled a new data set of fiscal forecasts for Italy, covering the last two decades 1992–2014, and checked whether the improvement in fiscal responsibility has reduced forecast errors. Neither the improvement in fiscal responsibility nor the political reforms reduced the optimistic bias in the fiscal projections of public and private forecasters.

Keywords: Fiscal forecasting; Fiscal responsibility; Forecast accuracy; Public and private forecasters; Evaluating forecasts; Government forecasting (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1016/j.ijforecast.2017.01.010

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Handle: RePEc:eee:intfor:v:33:y:2017:i:3:p:694-706