Abstract
AbstractIn this article, we point out requirements for potential output estimates used for cyclical adjustment in the German debt brake. Further, we propose supplementing the cyclical component in the debt break with an error term — regardless of the specific potential output estimation approach. The error term provides fiscal policy more time to adjust to potential output revisions and tax revenue forecast errors. Simulations based on past data show that the error term reduces erratic budgetary adjustments and strengthens automatic stabilisers.
Full Text 
Sign-in/Register to access full text options
Sign-in/Register to access full text options 
Published version (
Free)
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
