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Disentangling political and institutional determinants of budget forecast errors: A comparative approach

Mamadou Boukari and Francisco Veiga ()

Journal of Comparative Economics, 2018, vol. 46, issue 4, 1030-1045

Abstract: This paper provides a unique comparison between French and Portuguese local governments with respect to the nature and determinants of budget forecast errors. It starts by documenting and comparing their statistical properties. The results point at biased and inefficient budget forecasts, which seem to have been more cautious in French departments than in Portuguese municipalities. Second, we examine the political, institutional and economic determinants of forecast biases. Overall, we find that they are essentially driven by electoral motivations and by institutional differences across the two countries. In particular, opportunistic forecasting is more prevalent where governments enjoy greater margin of maneuver, and there is evidence of conservatism in French departments where fiscal autonomy is greater.

Keywords: Fiscal forecasting; Opportunism; Elections; Institutions; Local governments; France; Portugal (search for similar items in EconPapers)
JEL-codes: D72 H72 (search for similar items in EconPapers)
Date: 2018
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Working Paper: Disentangling political and institutional determinants of budget forecast errors: A comparative approach (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:46:y:2018:i:4:p:1030-1045

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