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Fiscal Forecasts and Slippages: The Role of the SGP and Domestic Fiscal Frameworks

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  • Patrícia Martins

    (Department of Economics, Sociology and Management (DESG), Centre for Transdisciplinary Development Studies (CETRAD), University of Trás-os-Montes and Alto Douro (UTAD), Escola de Ciências Humanas e Sociais – Polo II, Vila Real 5000-801, Portugal)

  • Leonida Correia

    (Department of Economics, Sociology and Management (DESG), Centre for Transdisciplinary Development Studies (CETRAD), University of Trás-os-Montes and Alto Douro (UTAD), Escola de Ciências Humanas e Sociais – Polo II, Vila Real 5000-801, Portugal)

Abstract

This paper studies the determinants of budget balance, public debt, and gross domestic product growth forecasts presented in the Stability and Convergence Programs for 15 European countries and respective forecasting errors for the period 1999–2009. Our results suggest that governments were more engaged in the preparation of budget balance forecasts than public debt forecasts because of the definition and application of the Stability and Growth Pact. Economic forecasts submitted by governments are generally more optimistic than those of the European Commission, but the inaccuracy is because of information problems. Countries with better domestic institutional frameworks publish more prudent economic forecasts.

Suggested Citation

  • Patrícia Martins & Leonida Correia, 2016. "Fiscal Forecasts and Slippages: The Role of the SGP and Domestic Fiscal Frameworks," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 58(2), pages 226-253, June.
    • Handle: RePEc:pal:compes:v:58:y:2016:i:2:p:226-253
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    References listed on IDEAS

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    Cited by:

    1. Jeffrey A. Frankel & Jesse Schreger, 2016. "Bias in Official Fiscal Forecasts: Can Private Forecasts Help?," NBER Working Papers 22349, National Bureau of Economic Research, Inc.

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