Fiscal Planning Under Uncertainty – The Implications of Economic and Fiscal Uncertainty for Budget Forecasts

36 Pages Posted: 14 Feb 2012

See all articles by Janine Robbins

Janine Robbins

Government of Canada - Department of Finance Canada

Brian Torgunrud

Government of Canada - Department of Finance Canada

Chris Matier

affiliation not provided to SSRN

Date Written: March 29, 2007

Abstract

This paper presents an analysis of the uncertainty in projections of the federal budget balance arising due to uncertainty in economic, and government revenue and spending projections. Budget projections frequently differ from actual results due to an unavoidable level of uncertainty contained in the underlying economic projections as well as a relationship between economic inputs and fiscal projections that is often volatile. Using a stochastic simulation model that includes a detailed specification for the economy and federal government finances and random variables to proxy uncertainty in these variables, a probability distribution for the budget balance is generated and the probability of achieving a surplus is estimated given various assumptions for fiscal prudence.

Suggested Citation

Robbins, Janine and Torgunrud, Brian and Matier, Chris, Fiscal Planning Under Uncertainty – The Implications of Economic and Fiscal Uncertainty for Budget Forecasts (March 29, 2007). Available at SSRN: https://ssrn.com/abstract=2004273 or http://dx.doi.org/10.2139/ssrn.2004273

Janine Robbins (Contact Author)

Government of Canada - Department of Finance Canada ( email )

Brian Torgunrud

Government of Canada - Department of Finance Canada ( email )

Chris Matier

affiliation not provided to SSRN ( email )

Register to save articles to
your library

Register

Paper statistics

Downloads
39
Abstract Views
549
PlumX Metrics