Bias in Official Fiscal Forecasts: Can Private Forecasts Help? / Jeffrey A. Frankel, Jesse Schreger.

Format:

Book

Author/Creator:

Frankel, Jeffrey A.

Contributor:

National Bureau of Economic Research.

Schreger, Jesse.

Series:

Working Paper Series (National Bureau of Economic Research) no. w22349.

NBER working paper series no. w22349

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Bias in Official Fiscal Forecasts

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2016.

Summary:

Government forecasts of GDP growth and budget balances are generally more over-optimistic than private sector forecasts. When official forecasts are especially optimistic relative to private forecasts ex ante, they are more likely also to be over-optimistic relative to realizations ex post. For example, euro area governments during the period 1999-2007 assiduously and inaccurately avoided forecasting deficit levels that would exceed the 3% Stability and Growth Pact threshold; meanwhile private sector forecasters were not subject to this crude bias. As a result, using private sector forecasts as an input into the government budgeting-making process would probably reduce official forecast errors for budget deficits.

Notes:

Print version record

June 2016.