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Fiscal credibility, target revisions and disagreement in expectations about fiscal results

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  • Montes, Gabriel Caldas
  • Acar, Tatiana

Abstract

This study aims to answer if fiscal credibility and the primary surplus target revisions affect the market expectation dispersion in relation to the future values of the public debt and the primary budget balance. The paper contributes to the literature on fiscal credibility as well as to the literature related to the disagreement in expectations about fiscal variables. Due to unavailability of data, there are few works that analyze the disagreement in expectations about public debt and the disagreement in expectations about the budget balance. The findings indicate that increases in fiscal credibility reduce the disagreement in expectations. Moreover, the lack of commitment to fiscal target makes it difficult to form expectations about the future path of the fiscal results, heightening disagreement in the forecasts.

Suggested Citation

  • Montes, Gabriel Caldas & Acar, Tatiana, 2020. "Fiscal credibility, target revisions and disagreement in expectations about fiscal results," The Quarterly Review of Economics and Finance, Elsevier, vol. 76(C), pages 38-58.
    • Handle: RePEc:eee:quaeco:v:76:y:2020:i:c:p:38-58
    DOI: 10.1016/j.qref.2019.06.002
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    More about this item

    Keywords

    Fiscal credibility; Disagreement; Expectation; Debt; Primary surplus;
    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
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

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