From First-Release to Ex-Post Fiscal Data: Exploring the Sources of Revision Errors in the EU

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may ABSTRACTThis paper explores the determinants of deviations of ex-post budget outcomes from firstrelease outcomes published towards the end of the year of budget implementation. The predictive content of the first-release outcomes is important, because these figures are an input for the next budget and the fiscal surveillance process. Deviations of ex-post from firstrelease fiscal figures may arise for political and strategic reasons. In particular, Ministries of Finance control the production of first-release figures, and may have an incentive to be overoptimistic at this stage. Our results suggest that an improvement in the quality of institutions, whether measured by the tightness of national fiscal rules, the medium-term budgetary framework or budgetary transparency, reduces the degree of optimism at the first-release stage, thereby making first-release figures more informative about the eventual outcomes. This supports the European Commission proposals for minimum standards for national fiscal frameworks and amendments by the European Parliament for improving national ownership. It also strengthens the case for a close monitoring by the Commission of the first-release production of fiscal figures.This version: May 2011.JEL codes: E6, H6.Keywords: real-time data, first-release data, ex-post data, fiscal policy, biases, decomposition, base effect, growth effect, denominator effect, fiscal institutions.* We thank Geert Langenus and Walpurga Koehler-Toeglhofer for their help in explaining large one-off data reclassifications for Belgium and Austria. We thank for helpful comments participants at the conference "PostCrisis Fiscal Consolidation Strategies for Europe" (University of Freiburg) and the 13 th Banca d'Italia Public Finance Workshop (Perugia) and at seminars at the University of Aarhus and the University of Oslo. The usual disclaimer applies. † IntroductionThe budget process consists of three stages. The first stage is the planning stage, 1 while the second stage is the implementation stage, which leads to the real-time "first-release" outcomes published towards the end of the year of implementation. Finally, the ex-post control stage produces the "revised" or "ex-post" outcomes. These outcomes measure the budgetary situation of a given year most accurately, because they are based on the largest Use of real-time data for fiscal policy analysis has become quite popular recently, an advantage of real-time...

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“…This finding is also highlighted in Beetsma et al . (), which analyses deviations of ex post budget outcomes from the end‐of‐the‐year budget. This paper finds that an improvement in the quality of institutions reduces the degree of optimism at the first‐release stage.…”