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Fifty Years of Fiscal Planning and Implementation in the Netherlands

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  • Beetsma, Roel
  • Giuliodori, Massimo
  • Walschot, Mark
  • Wierts, Peter

Abstract

Using real-time data from the annual budget over the period 1958-2009, we explore the planning and realization of fiscal policy in the Netherlands. Our key findings are the following. First, planned surpluses are on average unbiased, although they are overoptimistic during the first half of the sample and too pessimistic during the second half of the sample. The latter is the result of cautious real-time revenue estimates by the Dutch Ministry of Finance during this period. Second, real growth projections by the official Dutch forecasting agency are unbiased. This contrasts with the experience of the EU as a whole where biased growth projections represent an important source of fiscal slippage. Third, general economic conditions and the state of the public finances are important determinants of both fiscal plans and their implementation. Fourth, this is also the case for political and institutional factors. Expenditure overruns are partly related to political factors, whereas cautious revenue forecasts relate to the institutional setting. In particular, the most recent regime of the “trend-based budget policy” has worked well for fiscal discipline in the Netherlands.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7969.

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Date of creation: Aug 2010
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Handle: RePEc:cpr:ceprdp:7969

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Keywords: fiscal implementation; fiscal planning; institutional factors; political factors; real-time data;

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  1. Francisco Castro & Javier J. Pérez & Marta Rodríguez‐Vives, 2013. "Fiscal Data Revisions in Europe," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 45(6), pages 1187-1209, 09.
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  16. Philip R. Lane, 2002. "The Cyclical Behaviour of Fiscal Policy: Evidence from the OECD," Trinity Economics Papers 20022, Trinity College Dublin, Department of Economics.
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Citations

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Cited by:
  1. Frankel, Jeffrey A., 2011. "A Solution to Overoptimistic Forecasts and Fiscal Procyclicality: The Structural Budget Institutions Pioneered by Chile," Scholarly Articles 4723209, Harvard Kennedy School of Government.
  2. Paloviita, Maritta, 2012. "Fiscal planning and implementation: euro area analysis based on real time data," Research Discussion Papers 34/2012, Bank of Finland.
  3. Roel Beetsma & Benjamin Bluhm & Massimo Giuliodori & Peter Wierts, 2011. "From First-Release to Ex-Post Fiscal Data: Exploring the Sources of Revision Errors in the EU," Tinbergen Institute Discussion Papers 11-080/2, Tinbergen Institute.
  4. Cimadomo, Jacopo, 2011. "Real-time data and fiscal policy analysis: a survey of the literature," Working Paper Series 1408, European Central Bank.
  5. Jeffrey A. Frankel, 2011. "Over-optimism in Forecasts by Official Budget Agencies and Its Implications," NBER Working Papers 17239, National Bureau of Economic Research, Inc.
  6. Jeffrey Frankel, 2011. "A Solution to Fiscal Procyclicality: the Structural Budget Institutions Pioneered by Chile," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 14(2), pages 39-78, August.
  7. Roel Beetsma & Raymond Gradus, 2012. "A Discussion of the Changes to Europe's Macro-fiscal Framework in Response to the Crisis," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 13(1), pages 17-23, 04.

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