Revenue elasticities in euro area countries

Arbeitspapier

Revenue elasticities play a key role in forecasting, monitoring and analysing public finances under the European fiscal framework, which largely builds on cyclically adjusted indicators. This paper investigates whether there is evidence for dynamic – instead of the currently used static – elasticities in euro area countries. Applying country-specific error correction models we reveal important differences across countries. For a majority of euro area Member States we find evidence for dynamic revenue elasticities. We show that the application of such dynamic elasticities could substantially reduce forecast errors in several countries – with the evidence being stronger based on ex-post than based on real-time data.

Object Details

• ISBN: 978-92-899-2659-1
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECB Working Paper ; No. 1989

Classification and Topics

• Classification: Wirtschaft ; Fiscal Policy ; Forecasts of Budgets, Deficits, and Debt
• Subject: error correction models ; EU fiscal surveillance ; real-time data ; revenue elasticities ; tax forecasts

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Koester, Gerrit ; Priesmeier, Christoph
• Event: Veröffentlichung
• (who): European Central Bank (ECB)
• (where): Frankfurt a. M.
• (when): 2017

Further information

• DOI: doi:10.2866/47408
• Handle: http://hdl.handle.net/10419/154422
• Last update: 10.03.2025, 11:42 AM CET