From those lying facts to the underlying deficit
AbstractDevelopments in the headline budget balance are distorted by temporary factors. The most significant of these factors are the business cycle and creative accounting. Adequate information and estimates are available, allowing us to filter out these factors using a so-called adjustment for self-reversal. Expenditures and revenues adjusted in this way, however, continue to fluctuate, as fiscal policy measures can, in part, also turn out to be temporary in retrospect. We filter out this effect by using a four-year moving average (covering a full election cycle), instead of taking individual pieces of information into account. Moving averages are calculated in a forward-looking manner, for the three subsequent years in addition to the current year. This allows temporary effects in the past to be captured and renders their identification easier over the forecast horizon. Based on our results, the deficit indicators obtained using the adjustment for self-reversal and the adjustment for policy reversal are similar; the latter method, however, yields a higher deficit for the period 2010–2012, due to the tax cuts (phasing out of temporary taxes) announced for 2013. Overall, however, both adjusted indicators deviate substantially from the headline indicator, highlighting the significance of the adjustment.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Magyar Nemzeti Bank (the central bank of Hungary) in its journal MNB Bulletin.
Volume (Year): 5 (2010)
Issue (Month): 4 (December)
structural deficit; underlying deficit; cyclical adjustment; temporary measures; creative accounting;
Find related papers by JEL classification:
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Johanna Jeney).
If references are entirely missing, you can add them using this form.