Christian Breuer

On the Rationality of Medium-Term Tax Revenue Forecasts: Evidence from Germany (replication data)

This paper examines tax revenue projections in Germany for the period 1968 to 2012 with a focus on forecasting rationality. It is shown that tax revenue forecasts for the medium-term are upward biased. Overoptimistic revenue projections are particularly pronounced after the German reunification and reflect upward-biased GDP projections in this period. The predicted tax-GDP-ratio appears to be upward biased, as well. The forecasts are likely to overestimate tax revenues if the predicted tax-GDP-ratio exceeds its structural level of approximately 22½ percentage points. The results also indicate that forecast errors of short-term projections for the current year exhibit serial correlation. It is conceivable that the non-rational behaviour can be traced back to the specific institutional setting of revenue forecasting and budgetary planning in Germany.

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Citation

Breuer, Christian (2015): On the Rationality of Medium-Term Tax Revenue Forecasts: Evidence from Germany (replication data). Version: 1. Journal of Economics and Statistics. Dataset. http://dx.doi.org/10.15456/jbnst.2015176.150325