The suspension of belief is commonly needed for science fiction. Most space dramas require alien races to speak English or the existence of some form of instantaneous universal translator. It now seems that something similar is required when moving in fiscal space. Fiscal space is the money available for new measures while achieving minimum compliance with the rules. Lots of words are being used to describe this but can we tell what they actually mean?
Category: Fiscal Policy
Next Thursday (May 25) I will present a paper to The Statistical and Social Inquiry Society of Ireland (SSISI) on the recovery in the public finances following the financial crisis. The meeting takes place at the Royal Irish Academy on Dawson Street at 5.30pm. Details (including the paper) are available on the SSISI website here.
A new working paper from Niall Conroy and Eddie Casey of the Fiscal Council Secretariat.
Abstract:
The Council’s mandate includes endorsing, as it considers appropriate, the official macroeconomic forecasts of the Department of Finance on which the annual Budget and Stability Programme Update are based. As part of the endorsement process and for the purposes of its ongoing monitoring and analysis of the Irish economy, the Council’s Secretariat produces its own Benchmark macroeconomic projections. This paper describes the short-run forecasting models used by the Secretariat for producing these projections. The general forecasting approach can be described as follows. Equations are used to forecast each component of the expenditure side of the Quarterly National Accounts. Multiple models are estimated for most components, with the simple model average used as an initial input into the formulation of the Benchmark projections. The out-of-sample forecasting performance of these models is assessed at each endorsement round. In addition to these model-based projections, other elements are considered. Discussions with the Council and other forecasting agencies help to guide any judgement that may be applied before arriving at the final Benchmark projections.
The latest Assessment Report of the Fiscal Council is available here.
John was the first chair of Ireland’s fiscal advisory council, and he can take a share of the credit for the development of IFAC in terms of its analytical capability as well as the organisation supporting the Council members as his term ends. The Irish Times carries the details here.