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From First-Release to Ex-Post Fiscal Data: Exploring the Sources of Revision Errors in the EU

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  • Beetsma, Roel
  • Bluhm, Benjamin
  • Giuliodori, Massimo
  • Wierts, Peter

Abstract

This paper explores the determinants of deviations of ex-post budget outcomes from first-release outcomes published towards the end of the year of budget implementation. The predictive content of the first-release outcomes is important, because these figures are an input for the next budget and the fiscal surveillance process. Deviations of ex-post from first-release fiscal figures may arise for political and strategic reasons. In particular, Ministries of Finance control the production of first-release figures, and may have an incentive to be over-optimistic at this stage. Our results suggest that an improvement in the quality of institutions, whether measured by the tightness of national fiscal rules, the medium-term budgetary framework or budgetary transparency, reduces the degree of optimism at the first-release stage, thereby making first-release figures more informative about the eventual outcomes. This supports the European Commission proposals for minimum standards for national fiscal frameworks and amendments by the European Parliament for improving national ownership. It also strengthens the case for a close monitoring by the Commission of the first-release production of fiscal figures.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8413.

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Date of creation: Jun 2011
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Handle: RePEc:cpr:ceprdp:8413

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Keywords: base effect; biases; decomposition; denominator effect; ex-post data; first-release data; fiscal institutions; fiscal policy; growth effect; real-time data;

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References

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  1. Jacopo Cimadomo, 2007. "Fiscal Policy in Real Time," Working Papers 2007-10, CEPII research center.
  2. Roel Beetsma & Massimo Giuliodori & Peter Wierts, 2009. "Planning to cheat: EU fiscal policy in real time," Economic Policy, CEPR;CES;MSH, CEPR;CES;MSH, vol. 24, pages 753-804, October.
  3. Beetsma, Roel & Giuliodori, Massimo & Walschot, Mark & Wierts, Peter, 2010. "Fifty Years of Fiscal Planning and Implementation in the Netherlands," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7969, C.E.P.R. Discussion Papers.
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Citations

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Cited by:
  1. 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.
  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. Jacopo Cimadomo, 2011. "Real-Time Data and Fiscal Policy Analysis: a Survey of the Literature," Working Papers 2011-20, CEPII research center.
  4. Frankel, Jeffrey A. & Schreger, Jesse, 2012. "Over-Optimistic Official Forecasts in the Eurozone and Fiscal Rules," Working Paper Series rwp12-041, Harvard University, John F. Kennedy School of Government.
  5. Pessoa, Argentino, 2011. "The Euro Area sovereign debt crisis: Some implications of its systemic dimension," MPRA Paper 35328, University Library of Munich, Germany.
  6. Georgia Kaplanoglou & Vassilis T. Rapanos, 2013. "Fiscal Deficits and the Role of Fiscal Governance: The case of Greece," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, Queensland University of Technology (QUT), School of Economics and Finance, vol. 43(1), pages 5-30, March.
  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, Ifo Institute for Economic Research at the University of Munich, vol. 13(1), pages 17-23, 04.

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