Fifty Years of Fiscal Planning and Implementation in the Netherlands
Roel M. W. J. Beetsma
University of Amsterdam - Research Institute in Economics & Econometrics (RESAM); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Tinbergen Institute - Tinbergen Institute Amsterdam (TIA); Netspar
University of Amsterdam - Faculty of Economics & Econometrics (FEE); Tinbergen Institute - Tinbergen Institute Amsterdam (TIA)
affiliation not provided to SSRN
De Nederlandsche Bank - Research Department
August 26, 2010
De Nederlandsche Bank Working Paper No. 260
Using real-time data from the annual budget over the period 1958-2009, we explore the planning and realization of fiscal policy in the Netherlands . Our key findings are the following. First, planned surpluses are on average unbiased, although they are overoptimistic during the first half of the sample and too pessimistic during the second half of the sample. The latter is the result of cautious real-time revenue estimates by the Dutch Ministry of Finance during this period. Second, real growth projections by the official Dutch forecasting agency are unbiased. This contrasts with the experience of the EU as a whole where biased growth projections represent an important source of fiscal slippage. Third, general economic conditions and the state of the public finances are important determinants of both fiscal plans and their implementation. Fourth, this is also the case for political and institutional factors. Expenditure overruns are partly related to political factors , whereas cautious revenue forecasts relate to the institutional setting. In particular, the most recent regime of the “trendbased budget policy” has worked well for fiscal discipline in the Netherlands.
Number of Pages in PDF File: 43
JEL Classification: E6, H6working papers series
Date posted: October 26, 2011
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