Abstract
Most research focused on deficit, revenue and outlay in budget forecasts has addressed these issues separately. In this study, we investigate changes in budget forecasts from the Congressional Budget Office, applying a recently developed market-timing test. We find that the combined forecasts of revenue and outlay are useful with a horizon of 8 months in predicting an increase/decrease, and useful with a horizon of up to 20 months in predicting an acceleration/deceleration in the deficit.
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