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.