A Toolkit to Strengthen Government Budget Surveillance

42 Pages Posted: 11 Jul 2014

See all articles by Diego J. Pedregal

Diego J. Pedregal

University of Castilla-La Mancha

Javier J. Pérez

Banco de España - Research Department

Antonio Jesus Sanchez Fuentes

Universidad Complutense de Madrid (UCM); Universidad Complutense de Madrid (UCM) - Institute of International Studies (ICEI)

Date Written: July 11, 2014

Abstract

In this paper we develop a comprehensive short-term fiscal forecasting system of use for the real-time monitoring of the Spanish government’s borrowing requirement. Spain has been at the centre of the recent European sovereign debt crisis, not least because of sizeable failures in meeting public deficit targets. The system comprises a suite of models, with different levels of disaggregation (bottom-up vs top-down; general government vs sub-sectors), which are suitable for the automatic processing of the large amount of monthly/quarterly fiscal data currently published by the Spanish statistical authorities. Our tools are instrumental in the ex-ante detection of risks to official projections, and can thus help reduce the ex-post reputational costs of budgetary slippage. On the basis of our results, we discuss how official monitoring bodies could expand, on one hand, their toolkit to evaluate regular adherence to targets (moving beyond a legalistic approach) and, on the other, their communication policies as regards sources of risks to (ex-ante) compliance with budgetary targets.

Keywords: government accountability, transparency, fiscal Forecasting

JEL Classification: 62, E65, H6, C3, C82

Suggested Citation

Pedregal, Diego J. and Perez, Javier J. and Sanchez Fuentes, Antonio Jesus, A Toolkit to Strengthen Government Budget Surveillance (July 11, 2014). Banco de Espana Working Paper No. 1416, Available at SSRN: https://ssrn.com/abstract=2464949 or http://dx.doi.org/10.2139/ssrn.2464949

Diego J. Pedregal (Contact Author)

University of Castilla-La Mancha ( email )

Plaza Universidad, 1
Cuenca 02071
Spain

Javier J. Perez

Banco de España - Research Department ( email )

Alcala 50
28014 Madrid
Spain

HOME PAGE: http://www.bde.es/investigador/staff/95.htm

Antonio Jesus Sanchez Fuentes

Universidad Complutense de Madrid (UCM) ( email )

Madrid, 28040
Spain

Universidad Complutense de Madrid (UCM) - Institute of International Studies (ICEI) ( email )

Collado Villalba, Madrid, 28400
United States

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