Manipulating fiscal forecasts evidence from the German States Björn Kauder, Niklas Potrafke, Christoph Schinke
By: Kauder, Björn
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Contributor(s): Potrafke, Niklas | Schinke, Christoph.
Material type: 
ArticlePublisher: 2017Subject(s): HACIENDAS REGIONALES | FEDERALISMO FISCAL | ELECCIONES | CAMPAÑAS ELECTORALES | POLITICA FISCAL | GASTO PUBLICO REGIONAL | ALEMANIA
In:
FinanzArchiv v. 73, n. 2, June 2017, p. 213-236Summary: We examine whether German state governments manipulated fiscal forecasts beforeelections. Our data set includes three fiscal measures over the period 1980---2014. Theresults do not show that electoral motives influenced fiscal forecasts in West Germanstates. By contrast, East German state governments underestimated spending in preelection years (compared to other years) by about 0.20 percent of GDP, tax revenues byabout 0.36 percent of GDP, and net lending by 0.30 percent of GDP. Predicting low levelsof spending and tax revenues, East German state governments thus underestimated the size of government in preelection years.
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We examine whether German state governments manipulated fiscal forecasts beforeelections. Our data set includes three fiscal measures over the period 1980---2014. Theresults do not show that electoral motives influenced fiscal forecasts in West Germanstates. By contrast, East German state governments underestimated spending in preelection years (compared to other years) by about 0.20 percent of GDP, tax revenues byabout 0.36 percent of GDP, and net lending by 0.30 percent of GDP. Predicting low levelsof spending and tax revenues, East German state governments thus underestimated the size of government in preelection years.
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