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Fiscal forecasting performance in an emerging economy: An empirical assessment of Brazil

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  • Vasconcelos de Deus, Joseph David Barroso
  • de Mendonça, Helder Ferreira

Abstract

This study makes use of Brazilian data to analyze government budget balance forecast errors. Besides the analysis of the quality and efficiency of budget balance forecasts, economic, political, and institutional and governance dimensions are explored. The findings show that the data forecasts have low quality and efficiency. Furthermore, it is observed that the budget forecast error is subject to a backward-looking effect, a bias in the economic growth forecasts, as well as cyclical fluctuations. Finally, electoral cycles represent a source of overestimated forecasts, and strong institutions and governance supported by the public are able to suppress opportunistic motivations in budget forecasts.

Suggested Citation

  • Vasconcelos de Deus, Joseph David Barroso & de Mendonça, Helder Ferreira, 2017. "Fiscal forecasting performance in an emerging economy: An empirical assessment of Brazil," Economic Systems, Elsevier, vol. 41(3), pages 408-419.
    • Handle: RePEc:eee:ecosys:v:41:y:2017:i:3:p:408-419
    DOI: 10.1016/j.ecosys.2016.10.004
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    2. Julia Estefania‐Flores & Davide Furceri & Siddharth Kothari & Jonathan D. Ostry, 2023. "Worse than you think: Public debt forecast errors in advanced and developing economies," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 42(3), pages 685-714, April.
    3. Helder Ferreira de Mendonça & Vítor Ribeiro Laufer Calafate, 2021. "Lack of fiscal transparency and economic growth expectations: an empirical assessment from a large emerging economy," Empirical Economics, Springer, vol. 61(6), pages 2985-3027, December.
    4. Helder Ferreira de Mendonça & Pedro Mendes Garcia & José Valentim Machado Vicente, 2021. "Rationality and anchoring of inflation expectations: An assessment from survey‐based and market‐based measures," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 40(6), pages 1027-1053, September.
    5. de Mendonça, Helder Ferreira & de Deus, Joseph David Barroso Vasconcelos, 2019. "Central bank forecasts and private expectations: An empirical assessment from three emerging economies," Economic Modelling, Elsevier, vol. 83(C), pages 234-244.

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    More about this item

    Keywords

    Fiscal forecasting; Government budget balance; Fiscal policy; Disclosure of information;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

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