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Revenue Forecasting Practices: Differences across Countries and Consequences for Forecasting Performance

Author

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  • Thiess Büttner
  • Björn Kauder
Abstract
This paper reviews the practice and performance of revenue forecasting in selected OECD countries. While the mean forecast errors are small in most countries, the precision of the forecasts measured by the standard deviation of the forecast error differs substantially across countries. Based on a comparison of forecasting practices we show that these differences can be attributed to a large part to differences in the timing of the forecasts and in the tax structure. In addition, we find some evidence that differences in methods and institutions also matter for the forecasting precision. In particular, we find that the use of macroeconomic models as well as the independence of revenue forecasting are associated with a lower standard deviation of the forecast error.

Suggested Citation

  • Thiess Büttner & Björn Kauder, 2009. "Revenue Forecasting Practices: Differences across Countries and Consequences for Forecasting Performance," CESifo Working Paper Series 2628, CESifo.
    • Handle: RePEc:ces:ceswps:_2628
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    References listed on IDEAS

    as
    1. Feenberg, Daniel R, 1989. "Testing the Rationality of State Revenue Forecasts," The Review of Economics and Statistics, MIT Press, vol. 71(2), pages 300-308, May.
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    7. Frits Bos, 2008. "The Dutch fiscal framework: History, current practice and the role of the central planning bureau," OECD Journal on Budgeting, OECD Publishing, vol. 8(1), pages 1-42.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    revenue forecasting; international comparison; OECD countries; forecast error;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

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