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Improving fiscal policy in the EU: the case for independent forecasts
[‘Fiscal forecasting: The track record of the IMF, OECD and EC’]

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  • Lars Jonung
  • Martin Larch

Abstract

ARE OFFICIAL OUTPUT FORECASTS BIASED?We point out that official forecasts of output dynamics are crucial to the assessment of cyclically adjusted budget balances, and provide evidence that in some euro-area countries biased forecasts have played a thus far neglected role in generating excessive deficits. We suggest that the forecast bias may be politically motivated, and that forecasts produced by an independent authority would be better than in-house Ministry of Finance forecasts for the purpose of monitoring budget formation and budget outcomes.— Lars Jonung and Martin Larch

Suggested Citation

  • 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.
    • Handle: RePEc:oup:ecpoli:v:21:y:2006:i:47:p:492-534.
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