TY  - JOUR
AB  - Purpose This paper contributes to shed light on the quality and performance of US fiscal forecasts.Design/methodology/approach 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.Findings 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.Originality/value 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.
VL  - 48
IS  - 2
SN  - 0144-3585
DO  - 10.1108/JES-08-2019-0388
UR  - https://doi.org/10.1108/JES-08-2019-0388
AU  - An Zidong
AU  - Jalles Joao Tovar
PY  - 2020
Y1  - 2020/01/01
TI  - On the performance of US fiscal forecasts: government vs. private information
T2  - Journal of Economic Studies
PB  - Emerald Publishing Limited
SP  - 367
EP  - 391
Y2  - 2024/04/25
ER  -