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Dynamic Revenue Estimation

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Listed:
  • Alan J. Auerbach

Abstract

This paper considers the question of adopting 'dynamic' revenue estimation methods, which would incorporate the predicted macroeconomic effects of policies. It describes the current revenue estimation process and how these estimates are used in the formation of policy. It then evaluates this process as an exercise in forecasting, considering not only its methodology but also its performance. This evaluation illustrates some of the difficulties that would accompany attempts to use dynamic methods. Finally, the paper relates the choice among different revenue estimation procedures to the political process and the use to which the revenue estimates are put.

Suggested Citation

  • Alan J. Auerbach, 1996. "Dynamic Revenue Estimation," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 141-157, Winter.
    • Handle: RePEc:aea:jecper:v:10:y:1996:i:1:p:141-57
    Note: DOI: 10.1257/jep.10.1.141
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.10.1.141
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    References listed on IDEAS

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    6. Feldstein, Martin, 1995. "The Effect of Marginal Tax Rates on Taxable Income: A Panel Study of the 1986 Tax Reform Act," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 551-572, June.
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Alan J. Auerbach, 2003. "Fiscal Policy, Past and Present," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 34(1), pages 75-138.
    2. Teresa Leal & Javier J. Pérez & Mika Tujula & Jean-Pierre Vidal, 2008. "Fiscal Forecasting: Lessons from the Literature and Challenges," Fiscal Studies, Institute for Fiscal Studies, vol. 29(3), pages 347-386, September.
    3. Thiess Buettner & Bjoern Kauder, 2015. "Political biases despite external expert participation? An empirical analysis of tax revenue forecasts in Germany," Public Choice, Springer, vol. 164(3), pages 287-307, September.
    4. Alejandro Cunat & Szabolcs Deak & Marco Maffezzoli, 2022. "Tax Cuts in Open Economies," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 45, pages 83-108, July.
    5. Engen, Eric M. & Skinner, Jonathan, 1996. "Taxation and Economic Growth," National Tax Journal, National Tax Association;National Tax Journal, vol. 49(4), pages 617-642, December.
    6. João Tovar Jalles, 2020. "European commission’s fiscal forecasts in CEE countries: a thorough assessment," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 23(2), pages 161-183, July.
    7. Hayley Pallan, 2022. "Sovereign Spreads and Corporate Taxation," IHEID Working Papers 15-2022, Economics Section, The Graduate Institute of International Studies.
    8. repec:wly:soecon:v:81:3:y:2015:p:697-723 is not listed on IDEAS
    9. Ivo Bischoff & Wolfgang Gohout, 2010. "The political economy of tax projections," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 17(2), pages 133-150, April.
    10. Dean Scrimgeour, 2015. "Dynamic Scoring in a Romer‐Style Economy," Southern Economic Journal, John Wiley & Sons, vol. 81(3), pages 697-723, January.
    11. Alan J. Auerbach, 2005. "Dynamic Scoring: An Introduction to the Issues," American Economic Review, American Economic Association, vol. 95(2), pages 421-425, May.
    12. Michael Clemens, 2021. "The Fiscal Effect of Immigration: Reducing Bias in Influential Estimates," CESifo Working Paper Series 9464, CESifo.
    13. Auerbach, Alan J., 2002. "The Bush Tax Cut and National Saving," National Tax Journal, National Tax Association;National Tax Journal, vol. 55(3), pages 387-407, September.
    14. Rossana Merola & Javier J. Pérez, 2012. "Fiscal forecast errors: governments vs independent agencies?," Working Papers 1233, Banco de España.
    15. Zidong An & Joao Tovar Jalles, 2020. "On the performance of US fiscal forecasts: government vs. private information," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 48(2), pages 367-391, June.
    16. Manski, Charles F., 2013. "Public Policy in an Uncertain World: Analysis and Decisions," Economics Books, Harvard University Press, number 9780674066892, Spring.
    17. Feldstein, Martin, 1997. "How Big Should Government Be?," National Tax Journal, National Tax Association;National Tax Journal, vol. 50(2), pages 197-213, June.
    18. Sanz Labrador, Ismael & Sanz-Sanz, José Félix, 2013. "Política fiscal y crecimiento económico: consideraciones microeconómicas y relaciones macroeconómicas," Macroeconomía del Desarrollo 5367, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    19. Alejandro Esteller & Jorge Navas & Pilar Sorribas, "undated". "Las Cestas Autonómicas," Working Papers 1-02 Classification-JEL :, Instituto de Estudios Fiscales.
    20. Dean Scrimgeour, 2015. "Dynamic Scoring in a Romer-Style Economy," Southern Economic Journal, Southern Economic Association, vol. 81(3), pages 697-723, January.
    21. João Tovar Jalles & Bryn Battersby & Rachel Lee, 2024. "Effectiveness of Fiscal Announcements: Early Evidence from COVID-19," Open Economies Review, Springer, vol. 35(3), pages 623-658, July.
    22. Douglas W. Elmendorf, 2015. "“Dynamic Scoring”: Why and How to Include Macroeconomic Effects in Budget Estimates for Legislative Proposals," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 46(2 (Fall)), pages 91-149.

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    More about this item

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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