The effect of tax revenue budgeting errors on fiscal balance: evidence from the Swiss cantons

Florian Chatagny and Nils Soguel

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Abstract: This study is an empirical analysis of the impact of direct tax revenue budgeting errors on fiscal deficits. Using panel data from 26 Swiss cantons between 1980 and 2002, we estimate a single equation model on the fiscal balance, as well as a simultaneous equation model on revenue and expenditure.We use new data on budgeted and actual tax revenue to show that underestimating tax revenue significantly reduces fiscal deficits. Furthermore, we show that this effect is channeled through decreased expenditure. The effects of over and underestimation turn out to be symmetric.

Keywords: Fiscal deficits; tax revenue budgeting errors; Swiss cantons; simultaneous equations model with panel data (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (20)

Published in International Tax and Public Finance, 2012, 19, pp.319-337. ⟨10.1007/s10797-011-9189-5⟩

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Journal Article: The effect of tax revenue budgeting errors on fiscal balance: evidence from the Swiss cantons (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00760272

DOI: 10.1007/s10797-011-9189-5

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