Fiscal targets. A guide to forecasters?

Arbeitspapier

Should rational agents take into consideration government policy announcements? A skilled agent (an econometrician) could set up a model to combine the following two pieces of information in order to anticipate the future course of fiscal policy in real-time: (i) the ex-ante path of policy as published/announced by the government; (ii) incoming, observed data on the actual degree of implementation of ongoing plans. We formulate and estimate empirical models for a number of EU countries (Germany, France, Italy, and Spain) to show that government (consumption) targets convey useful information about ex-post policy developments when policy changes significantly (even if past credibility is low) and when there is limited information about the implementation of plans (e.g. at the beginning of a fiscal year). In addition, our models are instrumental to unveil the current course of policy in real-time. Our approach complements a well-established branch of the literature that finds politically-motivated biases in policy targets.

Object Details

• ISBN: 978-92-899-1647-9
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECB Working Paper ; No. 1834

Classification and Topics

• Classification: Wirtschaft ; Quantitative Policy Modeling ; Fiscal Policies and Behavior of Economic Agents: General ; Forecasts of Budgets, Deficits, and Debt ; Policy Objectives; Policy Designs and Consistency; Policy Coordination ; Fiscal Policy
• Subject: fiscal policy ; forecasting ; learning ; policy credibility

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Paredes, Joan ; Pérez, Javier J. ; Pérez Quirós, Gabriel
• Event: Veröffentlichung
• (who): European Central Bank (ECB)
• (where): Frankfurt a. M.
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/154267
• Last update: 10.03.2025, 11:43 AM CET