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The Political Economy of Revenue-Forecasting Experience from Low-Income Countries

Author/Editor: Danninger, Stephan | Cangiano, M. | Kyobe, Annette
Authorized for Distribution: January 1, 2005
Electronic Access: Free Full Text (PDF file size is 1,173KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: This paper analyzes interference and timeliness in the revenue-forecasting process, using new data on revenue-forecasting practices in low-income countries. Interference is defined as the occurrence of a significant deviation from purely technical forecasts. A theoretical model explains forecasting interference through government corruption. The data broadly supports the model, and the results are robust to alternative explanations. The paper also constructs three indices-transparency, formality, and organizational simplicity-that characterize revenue-forecasting practices, and assesses their effectiveness in producing an upfront-that is, timely-budget envelope. More transparent and simple forecasting processes lead to early budget constraints, while formality has no measurable effect.
 
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Series: Working Paper No. 05/2
Subject(s): Political economy | Revenues | Low income developing countries | Corruption | Economic forecasting | Forecasting models
Author's keyword(s): Revenue forecasting | corruption | forecasting bias
 
English  
    Published:   January 1, 2005        
    ISBN/ISSN:   1934-7073   Format:   Paper
    Stock No:   WPIEA2005002   Pages:   30
    Price:   US$15.00 (Academic Rate: US$15.00 )
       
     
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