Fiscal sustainability and the accuracy of macroeconomic forecasts: Do supranational forecasts rather than government forecasts make a difference? Online publication date:: Tue, 05-Apr-2011
by Carlos Fonseca Marinheiro
International Journal of Sustainable Economy (IJSE), Vol. 3, No. 2, 2011
Abstract: Credible fiscal plans that aim at restoring fiscal sustainability will be essential to counter the present increase in debt levels all across Europe. The macroeconomic scenario of such plans will be crucial. This paper assesses whether there is any advantage in delegating (part of) such power to supranational forecasts. The evidence on the relative performance of the European Commission's (EC) growth forecast is rather mixed, with considerable variation at the country level. Some national government forecasts (France, Italy and Portugal) perform worse in terms of descriptive statistics than the EC forecast for all forecast horizons. For the year ahead the EC growth forecast is better than the official forecasts for almost three quarters of the EU-15 countries. All in all, since the EC forecast appears to be a good benchmark, in order to reduce the (optimistic) forecast bias, national governments could be forced to justify any large (optimistic) deviation from this benchmark when presenting their respective national Stability and Growth Programmes.
Online publication date:: Tue, 05-Apr-2011
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Sustainable Economy (IJSE):
Login with your Inderscience username and password:
Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.
If you still need assistance, please email firstname.lastname@example.org