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Revenue Forecasts as Performance Targets

Author/Editor: Danninger, Stephan
Authorized for Distribution: January 1, 2005
Electronic Access: Free Full Text (PDF file size is 418KB)
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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: Budget revenue forecasts should be best estimates of expected receipts. Often they are not. This paper analyzes the rationale for overstated revenue forecasts and derives conditions for intentional biases. A theoretical model demonstrates that overstated revenue forecasts can be the result of the government's attempt to boost unobserved revenue collection effort. If positive forecast errors are costly and undermine public credibility of budget expenditure plans, the reverse outcome is possible and governments may understate revenue forecasts. A case study for Azerbaijan is presented in support of the former incentive motive.
 
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Series: Working Paper No. 05/14
Subject(s): Revenues | Azerbaijan | Forecasting models
Author's keyword(s): Revenue forecast
 
English  
    Published:   January 1, 2005        
    ISBN/ISSN:   1934-7073   Format:   Paper
    Stock No:   WPIEA2005014   Pages:   20
    Price:   US$15.00 (Academic Rate: US$15.00 )
       
     
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