Arbeitspapier
Rationality of direct tax revenue forecasts under asymmetric losses: Evidence from Swiss cantons
The current debt crisis has shed light on the importance of accurate fiscal forecasts. In particular, the accuracy of revenue forecasts is central since they set the limit within which expenditure should remain in order to reach fiscal balance. Therefore, forecasting tax revenue accurately is a key step in the implementation of sound fiscal policies. The current paper contributes to the empirical literature on budget predictions by providing new evidence about Swiss cantons. Using data from 26 Swiss cantons over 1944-2010, we apply the method developed by Elliott et al. (2005) to test the rationality of direct tax revenue forecasts. We mainly find that 1) when considering the percent forecast error, loss functions are asymmetric in a majority of cantons, 2) allowing for asymmetric losses, results of rationality tests are substantially altered in the sense that more cantons turn out to produce rational forecasts 3) when considering forecasts of growth rates, almost no evidence of asymmetric loss function is found and finally 4) forecasts of tax revenue growth rate turn out to be rational in a higher number of cantons than forecasts of levels of tax revenue.
- Language
-
Englisch
- Bibliographic citation
-
Series: KOF Working Papers ; No. 324
- Classification
-
Wirtschaft
Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models
Forecasts of Budgets, Deficits, and Debt
State and Local Taxation, Subsidies, and Revenue
- Subject
-
Tax Revenue Forecasts
Rationality Tests
Asymmetric loss function
Swiss cantons
Direkte Besteuerung
Steuereinnahmen
Statistischer Test
Teilstaat
Schweiz
- Event
-
Geistige Schöpfung
- (who)
-
Chatagny, Florian
Siliverstovs, Boriss
- Event
-
Veröffentlichung
- (who)
-
ETH Zurich, KOF Swiss Economic Institute
- (where)
-
Zurich
- (when)
-
2013
- DOI
-
doi:10.3929/ethz-a-007597571
- Handle
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Chatagny, Florian
- Siliverstovs, Boriss
- ETH Zurich, KOF Swiss Economic Institute
Time of origin
- 2013
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