Fiscal Forecast Errors: Governments vs Independent Agencies?

Forecast Errors in Service Systems

We investigate the presence and impact of forecast errors in the arrival rate of customers to a service system. Analysis of a large dataset shows that forecast errors can be large relative to the fluctuations naturally expected in a Poisson process. We show that ignoring forecast errors typically leads to overestimates of performance and that forecast errors of the magnitude seen in our dataset...

Causes of Fiscal Crises in State and Local Governments

Financial insolvency is a rare occurrence in American state and local governments. However, when it does happen, as in the case of Detroit’s historical bankruptcy filing in 2013, the consequences for vital city services, public employees, and taxpayers can be devastating. This essay reviews existing and emerging research on the causes of government fiscal crises, paying particular attention to ...

Governments' Revenues Windfalls and the Stabilisation Function of Fiscal Policies

We analyse the size and potential determinants of governments' revenues windfall in the European Union. Using information about fiscal plans taken from the Stability and Convergence Programmes (SCP) submitted between 1998 and 2006, revenue windfalls are found to have represented on average 0.23% of GDP in the euro-area during the period 19992007, hiding substantial variations both across time (...

Budgetary Institutions and Expenditure Outcomes Binding Governments to Fiscal Performance

Fiscal stringency and fiscal sustainability: Panel evidence from the American state and local governments

Most state (and local) governments in the U.S. operate under formal fiscal rules which limit their ability to run budget deficits and resort to debt financing. A priori, one would expect to find evidence in favor of an intertemporally balanced budget, or fiscal sustainability, for these states, especially those characterized by a relatively high degree of fiscal stringency. We test this hypothe...