Manipulating Fiscal Forecasts: Evidence from the German States

Björn Kauder, Niklas Potrafke and Christoph Schinke ()

FinanzArchiv: Public Finance Analysis, 2017, vol. 73, issue 2, 213-236

Abstract: We examine whether German state governments manipulated fiscal forecasts before elections. Our data set includes three fiscal measures over the period 1980-2014. The results do not show that electoral motives influenced fiscal forecasts in West German states. By contrast, East German state governments underestimated spending in preelection years (compared to other years) by about 0.20 percent of GDP, tax revenues by about 0.36 percent of GDP, and net lending by 0.30 percent of GDP. Predicting low levels of spending and tax revenues, East German state governments thus underestimated the size of government in preelection years.

Keywords: fiscal forecasts; electoral cycles; East and West Germany (search for similar items in EconPapers)
JEL-codes: E32 E62 H68 (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (19)

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DOI: 10.1628/001522108X14877521353438

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