Abstract
This paper describes a fiscal database for Australia including measures of government spending, revenue, deficits, debt and various sub‐aggregates as initially published and subsequently revised. The data vintages are collated from various sources and provide a comprehensive description of the Australian fiscal environment as experienced in real time. Methods are described which exploit the richness of the real‐time data sets, and they are illustrated through an analysis of the extent to which stated fiscal plans are realised in practice and through the estimation of fiscal multipliers which draw a distinction between policy responses and policy initiatives. We find predictable differences between plans and actual fiscal policy and a larger multiplier for policy initiatives than for implementation errors.
Highlights
It is widely recognised that empirical policy analysis can be seriously misleading if it is conducted using the most recent vintage of available data as opposed to the data that was available at the time decisions were made
Revisions in data mean that the measurements of historical outcomes published today may differ substantially from the data on which plans were made and so ‘real-time’ datasets, containing all the vintages of data that were available in the past, are required to fully understand the plans
The importance of the use of real-time data is best conveyed by looking at specific issues and we make use of the real-time data on total outlays and total receipts to examine (i) whether the government’s fiscal plans are realised and, to the extent that they are not, whether there are any systematic patterns in the gap between plans and outcomes; and (ii) whether the information on plans and outcomes provides insights on the usefulness of fiscal policy in demand management
Summary
It is widely recognised that empirical policy analysis can be seriously misleading if it is conducted using the most recent vintage of available data as opposed to the data that was available at the time decisions were made. A second reason for the recent interest in the use of real time data in fiscal policy analysis has been the focus on governments’ reactions to the global financial crisis given the constraints imposed on monetary policy by the zero lower bound This has prompted studies on how actual expenditure relates to planned expenditure at different points in the. The Reserve Bank of Philadelphia’s real time database, the OECD’s real time database, the ECB-EABCN’s EU area-wide real time database, and the recently available Australian Real Time Macroeconomic Database all include some fiscal variables not in as much detail as that available in ALFRED For this reason, most empirical studies attempting to look at fiscal policy using real time data have either focused on the use of real time measures of output only or have constructed their own real-time databases for selected fiscal indicators.
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