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On the performance of US fiscal forecasts: government vs. private information

Zidong An (Renmin University of China, Beijing, China)
Joao Tovar Jalles (ISEG – School of Economics and Management, REM – Research in Economics and Mathematics, UECE – Research Unit on Complexity and Economics, University of Lisbon, Lisbon, Portugal) (Governance and Economics for Policy, Nova School of Business and Economics, New University of Lisbon, Lisbon, Portugal)

Journal of Economic Studies

ISSN: 0144-3585

Article publication date: 9 June 2020

Issue publication date: 2 February 2021




This paper contributes to shed light on the quality and performance of US fiscal forecasts.


The first part inspects the causes of official fiscal forecasts revisions by Congressional Budget Office (CBO) between 1984 and 2016 that are due to technical, economic or policy reasons.


Both individual and cumulative means of forecast errors are relatively close to zero, particularly in the case of expenditures. CBO averages indicate net average downward revenue and expenditure revisions and net average upward deficit revisions. Focusing on the causes of the technical component, the authors uncover that its revisions are quite unpredictable, which cast doubts on inferences about fiscal policy sustainability that rely on point estimates. Comparing official with private-sector (consensus) forecasts, despite the informational advantages CBO might have, one cannot unequivocally say that one or the other is more accurate. Evidence also seems to suggest that CBO forecasts are consistently heavily biased toward optimism while this is less the case for consensus forecasts. Not only is the extent of information rigidity is more prevalent in CBO forecasts but also evidence seems to indicate that consensus forecasts dominate CBO in terms of information content.


The authors provide a detailed analysis on US fiscal forecasts both using revenue and expenditure and decomposing forecast errors into several explanatory components. Moreover, the authors compare official with private-sector (consensus) forecasts and assess which one is better or preferred.



The authors are grateful to the editor and one anonymous referee for useful comments and suggestions. They also thank Alan Auerbach for insightful discussions on the topic including to an earlier version of this paper. The usual disclaimer applies. The views expressed are those of the author(s) and do not necessarily represent those of the IMF or its member countries.Funding: The authors acknowledge financial Support from FCT - Fundacao para a Ciencia e Tecnologia (Portugal), national funding through research grants UIDB/05069/2020 and UID/SOC/04521/2020.


An, Z. and Jalles, J.T. (2021), "On the performance of US fiscal forecasts: government vs. private information", Journal of Economic Studies, Vol. 48 No. 2, pp. 367-391.



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