Arbeitspapier
Cyclical adjustment in fiscal rules: Some evidence on real-time bias for EU-15 countries
Most EU member states will adopt fiscal rules that refer to cyclically-adjusted borrowing limits. Under the standard cyclical adjustment procedure, trend increases in public debt based on cyclical components are prevented if the real-time output gaps used to calculate cyclical components balance over time. We analyse real-time output gaps for EU-15 countries over the 1996-2011 period as estimated by the EU, the IMF and the OECD. Compared to each institution's final estimate, we find that real-time output gaps in our sample period are negatively biased. This bias is observed (i) irrespective of the source of the data, (ii) in all real-time vintages, (iii) basically across the entire cross-section of countries. The magnitude of the bias is considerable: on average, real-time cyclical components as a percentage of GDP are biased downwards by about 0.5 percentage point per year. Our results suggest that fiscal rules should incorporate ex-post checks of the unbiasedness of the cyclical components used within the rule. Potential biases would then decrease or increase future borrowing limits.
- ISBN
-
978-3-86558-822-7
- Sprache
-
Englisch
- Erschienen in
-
Series: Bundesbank Discussion Paper ; No. 15/2012
- Klassifikation
-
Wirtschaft
National Budget; Budget Systems
Forecasts of Budgets, Deficits, and Debt
Business Fluctuations; Cycles
- Thema
-
public finance
fiscal rules
cyclical adjustment
Finanzpolitik
Regelgebundene Politik
Konjunktur
Wirtschaftspotenzial
EU-Staaten
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Kempkes, Gerhard
- Ereignis
-
Veröffentlichung
- (wer)
-
Deutsche Bundesbank
- (wo)
-
Frankfurt a. M.
- (wann)
-
2012
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:41 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Kempkes, Gerhard
- Deutsche Bundesbank
Entstanden
- 2012
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