Early warning or just wise after the event? The problem of using cyclically adjusted budget deficits for fiscal surveillance
The effectiveness of cyclically adjusted balances (CABs) as an indicator of the health of public finances depends on the accuracy with which cyclically adjusted figures can be calculated in real time. This paper measures the accuracy of such figures using a specially constructed real time dataset containing published values of deficits, output gaps and cyclically adjusted deficits from successive issues of OECD economic outlook. We find that data revisions are so great that real-time CABs have low power in detecting fiscal slippages as defined by the ex post data.
|Date of creation:||09 Feb 2007|
|Date of revision:||09 Feb 2007|
|Contact details of provider:|| Postal: |
Web page: http://www.bankofestonia.info
More information through EDIRC
|Order Information:|| Postal: Estonia bld. 13, 15095 Tallinn, ESTONIA|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Marco Buti & Sylvester Eijffinger & Daniele Franco, 2003.
"Revisiting the Stability and Growth Pact: grand design or internal adjustment?,"
European Economy - Economic Papers
180, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
- Buti, Marco & Eijffinger, Sylvester C W & Franco, Daniele, 2003. "Revisiting the Stability and Growth Pact: Grand Design or Internal Adjustment?," CEPR Discussion Papers 3692, C.E.P.R. Discussion Papers.
- J. de Haan & H. Berger & D. Jansen, 2003.
"The end of the stability and growth pact?,"
WO Research Memoranda (discontinued)
748, Netherlands Central Bank, Research Department.
- Francesco Giavazzi & Tullio Jappelli & Marco Pagano, 2000.
"Searching for Non-Linear Effects of Fiscal Policy: Evidence from Industrial and Developing Countries,"
NBER Working Papers
7460, National Bureau of Economic Research, Inc.
- Giavazzi, Francesco & Jappelli, Tullio & Pagano, Marco, 2000. "Searching for non-linear effects of fiscal policy: Evidence from industrial and developing countries," European Economic Review, Elsevier, vol. 44(7), pages 1259-1289, June.
- Giavazzi, Francesco & Jappelli, Tullio & Pagano, Marco, 2000. "Searching for Non-Linear Effects of Fiscal Policy: Evidence from Industrial and Developing Countries," CEPR Discussion Papers 2374, C.E.P.R. Discussion Papers.
- de Haan, Jakob & Berger, Helge & Jansen, David-Jan, 2003. "The end of stability and growth pact?," Discussion Papers 2003/16, Free University Berlin, School of Business & Economics.
- St-Amant, P. & van Norden, S., 1997. "Measurement of the Output Gap: A Discussion of Recent Research at the Bank of Canada," Technical Reports 79, Bank of Canada.
- Giuliodori, Massimo & Beetsma, Roel, 2008.
"On the relationship between fiscal plans in the European Union: An empirical analysis based on real-time data,"
Journal of Comparative Economics,
Elsevier, vol. 36(2), pages 221-242, June.
- Beetsma, Roel & Giuliodori, Massimo, 2007. "On the Relationship between Fiscal Plans in the European Union: An Empirical Analysis Based on Real-Time Data," CEPR Discussion Papers 6088, C.E.P.R. Discussion Papers.
- Athanasios Orphanides, 1998.
"Monetary policy rules based on real-time data,"
Finance and Economics Discussion Series
1998-03, Board of Governors of the Federal Reserve System (U.S.).
- Alain GUAY & Pierre SAINT-AMANT, 2005.
"Do the Hodrick-Prescott and Baxter-King Filters Provide a Good Approximation of Business Cycles?,"
Annales d'Economie et de Statistique,
ENSAE, issue 77, pages 133-155.
- Alain Guay & Pierre St-Amant, 1997. "Do the Hodrick-Prescott and Baxter-King Filters Provide a Good Approximation of Business Cycles?," Cahiers de recherche CREFE / CREFE Working Papers 53, CREFE, Université du Québec à Montréal.
- Forni, Lorenzo & Momigliano, Sandro, 2004.
"Cyclical sensitivity of fiscal policies based on real-time data,"
4315, University Library of Munich, Germany.
- Lorenzo Forni & Sandro Momigliano, 2004. "Cyclical sensitivity of fiscal policies based on real-time data," Temi di discussione (Economic working papers) 540, Bank of Italy, Economic Research and International Relations Area.
When requesting a correction, please mention this item's handle: RePEc:eea:boewps:wp2007-02. See general 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: (Peeter Luikmel)
If references are entirely missing, you can add them using this form.