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Manipulating Fiscal Forecasts: Evidence from the German States

Björn Kauder, Niklas Potrafke () and Christoph Schinke ()

No 6310, CESifo Working Paper Series from CESifo Group Munich

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 pre-election 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 pre-election years.

Keywords: fiscal forecasts; electoral cycles; East and West Germany (search for similar items in EconPapers)
JEL-codes: H68 E32 E62 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-mac and nep-ure
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9) Track citations by RSS feed

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