IDEAS home Printed from https://ideas.repec.org/p/zbw/zewdip/2902.html
   My bibliography  Save this paper

Planning or propaganda? An evaluation of Germany's medium-term budgetary planning

Author

Listed:
  • Heinemann, Friedrich

Abstract

In Germany, the medium-term financial planning ("Mifrifi") was introduced at the end of the sixties. This study scrutinizes the experience of the German Bund with more than thirty years of financial planning. In the first step, the paper explores the potential normative and political-economic driving forces of fiscal projections. The following empirical part evaluates Mifrifi?s forecasting quality with regard to expenditures, taxes and deficits. A model is tested relating the forecasted budgetary trends to economic, institutional and political-economic factors. The financial planning turns out to be ineffective in making budgetary policy more predictable. The projections are heavily biased towards over-optimism. The Maastricht Treaty appears to have transformed Germany?s budgetary planning not into the direction of more credible and binding projections, but rather towards the production of less realistic and unduly favourable outlooks. The policy conclusion hints towards an independent institution taking over the responsibility for fiscal forecasts. Such an institution would not face the government?s inherent problem being unable to promise in a credible way the production of unbiased forecasts.

Suggested Citation

  • Heinemann, Friedrich, 2005. "Planning or propaganda? An evaluation of Germany's medium-term budgetary planning," ZEW Discussion Papers 05-12, ZEW - Leibniz Centre for European Economic Research.
  • Handle: RePEc:zbw:zewdip:2902
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/24105/1/dp0512.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Lars Jonung & Martin Larch, 2006. "Improving fiscal policy in the EU: the case for independent forecasts [‘Fiscal forecasting: The track record of the IMF, OECD and EC’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 21(47), pages 492-534.
    2. Rolf Strauch & Mark Hallerberg & Jürgen von Hagen, 2004. "Budgetary Forecasts in Europe – The Track Record of Stability and Convergence Programmes," Economic Working Papers at Centro de Estudios Andaluces E2004/42, Centro de Estudios Andaluces.
    3. Bryan Campbell & Eric Ghysels, 1997. "An Empirical Analysis of the Canadian Budget Process," Canadian Journal of Economics, Canadian Economics Association, vol. 30(3), pages 553-576, August.
    4. Francis X. Diebold & Jose A. Lopez, 1995. "Forecast evaluation and combination," Research Paper 9525, Federal Reserve Bank of New York.
    5. Mr. Stephan Danninger, 2005. "Revenue Forecasts as Performance Targets," IMF Working Papers 2005/014, International Monetary Fund.
    6. Mark S. Kamlet & David C. Mowery & Tsai-Tsu Su, 1987. "Whom do you trust? An analysis of executive and congressional economic forecasts," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 6(3), pages 365-384.
    7. LF Jameson Boex & Jorge Martinez-Vazquez & Robert McNab, 1998. "Multi-Year Budgeting: A Review of International Practices and Lessons for Developing and Transitional Economies," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper9804, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    8. Blackley, Paul R & DeBoer, Larry, 1993. "Bias in OMB's Economic Forecasts and Budget Proposals," Public Choice, Springer, vol. 76(3), pages 215-232, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Beate Jochimsen & Robert Lehmann, 2017. "On the political economy of national tax revenue forecasts: evidence from OECD countries," Public Choice, Springer, vol. 170(3), pages 211-230, March.
    2. Beate Jochimsen & Robert Lehmann, 2017. "On the political economy of national tax revenue forecasts: evidence from OECD countries," Public Choice, Springer, vol. 170(3), pages 211-230, March.
    3. Cronin, David & McQuinn, Kieran, 2021. "Are official forecasts of output growth in the EU still biased?," Journal of Policy Modeling, Elsevier, vol. 43(2), pages 337-349.
    4. Richard Boylan, 2008. "Political distortions in state forecasts," Public Choice, Springer, vol. 136(3), pages 411-427, September.
    5. Artur Tarassow & Sven Schreiber, 2018. "FEP - the forecast evaluation package for gretl," IMK Working Paper 190-2018, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    6. Joan Paredes & Javier J. Pérez & Gabriel Perez Quiros, 2023. "Fiscal targets. A guide to forecasters?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 38(4), pages 472-492, June.
    7. Xisco Oliver Rullán & Joan Rosselló Villalonga, 2018. "The Determinants of Regional Budget Forecast Errors in Federal Economies: Spain 1995-2013," Hacienda Pública Española / Review of Public Economics, IEF, vol. 226(3), pages 85-121, September.
    8. Carriero, Andrea & Mumtaz, Haroon & Theophilopoulou, Angeliki, 2015. "Macroeconomic information, structural change, and the prediction of fiscal aggregates," International Journal of Forecasting, Elsevier, vol. 31(2), pages 325-348.
    9. Carlos Fonseca Marinheiro, 2010. "Fiscal sustainability and the accuracy of macroeconomic forecasts: do supranational forecasts rather than government forecasts make a difference?," GEMF Working Papers 2010-07, GEMF, Faculty of Economics, University of Coimbra.
    10. 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.
    11. Dumitru, Ionut & Stanca, Razvan, 2010. "Fiscal discipline and economic growth – the case of Romania," MPRA Paper 27300, University Library of Munich, Germany.
    12. Mr. Martin Mühleisen & Ms. Kornelia Krajnyak & Mr. Stephan Danninger & Mr. David Hauner & Mr. Bennett W Sutton, 2005. "How Do Canadian Budget Forecasts Compare with Those of Other Industrial Countries?," IMF Working Papers 2005/066, International Monetary Fund.
    13. David Cronin & Kieran McQuinn, 2021. "The (pro-) cyclicality of government consumption in the EU and official expectations of future output growth: new evidence," International Economics and Economic Policy, Springer, vol. 18(2), pages 331-345, May.
    14. Pina, Álvaro M. & Venes, Nuno M., 2011. "The political economy of EDP fiscal forecasts: An empirical assessment," European Journal of Political Economy, Elsevier, vol. 27(3), pages 534-546, September.
    15. Jacopo Cimadomo, 2016. "Real-Time Data And Fiscal Policy Analysis: A Survey Of The Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 30(2), pages 302-326, April.
    16. Björn Kauder & Niklas Potrafke & Christoph Schinke, 2017. "Manipulating Fiscal Forecasts: Evidence from the German States," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 73(2), pages 213-236, June.
    17. Mr. Anthony M Annett, 2006. "Enforcement and the Stability and Growth Pact: How Fiscal Policy Did and Did Not Change Under Europe’s Fiscal Framework," IMF Working Papers 2006/116, International Monetary Fund.
    18. 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.
    19. Jacopo Cimadomo, 2012. "Fiscal Policy in Real Time," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(2), pages 440-465, June.
    20. Alessandro Turrini, 2008. "Fiscal policy and the cycle in the Euro Area: The role of government revenue and expenditure," European Economy - Economic Papers 2008 - 2015 323, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.

    More about this item

    Keywords

    Mifrifi; budgetary planning; Stability and Growth Pact;
    All these keywords.

    JEL classification:

    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:zewdip:2902. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/zemande.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.