DP1836 Fiscal Solvency and Fiscal Forecasting in Europe
Author(s): | Michael J Artis, Massimiliano Marcellino |
Publication Date: | March 1998 |
Keyword(s): | Deficits, Fiscal Policy, Forecast Accuracy, Maasticht treaty, Solvency, stability and growth pact |
JEL(s): | C22, D99, E62, H63 |
Programme Areas: | International Macroeconomics |
Link to this Page: | cepr.org/active/publications/discussion_papers/dp.php?dpno=1836 |
This paper analyses two features of concern to policy-makers in the countries of the prospective European Monetary Union: the solvency of their government?s finances; and the accuracy of fiscal forecasts. Extending the existing methodology of solvency tests, the paper finds that, with few exceptions, EU governments are insolvent, albeit debt/GDP ratios show signs of stabilizing. The accuracy of official short-term fiscal forecasts (those of the OECD) is analysed, using conventional techniques, and found to be reassuring.