Economic Inquiry · 2009 · 24 citations · 28 references
Social SciencesEconomicsPublic FinanceEconometricsFiscal PolicyForecastingBudget DeficitsFiscal DeficitsFiscal ManagementFiscal Policy AnalysisGovernment Budget DeficitsPublic DeficitsAutoregressive ModelsAutoregressive ProcessesBudget Deficit ForecastingFiscal Adjustment PathsForecast Performance EvaluationGovernment Expenditure GrowthNonlinear Regression ModelsUnivariate Forecasting
We analyze the fiscal adjustment process in the United States using a multivariate threshold vector error regression model. The shift from single‐equation to multivariate setting adds value both in terms of our economic understanding of the fiscal adjustment process and the forecasting performance of nonlinear models. We find evidence that fiscal authorities intervene to reduce real per capita deficit only when it reaches a certain threshold and that fiscal adjustment takes place primarily by cutting government expenditure. The results of out‐of‐sample density forecast and probability forecasts suggest that a shift from a univariate autoregressive model to a multivariate model improves forecast performance. ( JEL C32, C53, E62)
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Fiscal Expansions and Adjustments in OECD Countries
Alberto Alesina, Roberto Perotti, Francesco Giavazzi et al. · Economic Policy · 1995 · 758 citations
IS THE BUDGET DEFICIT “TOO LARGE?”
Craig S. Hakkio, Mark Rush · Economic Inquiry · 1991 · 737 citations