hero working papers

Fiscal Solvency and Fiscal Forecasting in Europe

Number: 142
Year: 1998
Author(s): Michael Artis (EUI, Firenze), Massimiliano Marcellino (IGIER, Università Bocconi and Università di Firenze)

This paper analyses two features of concern to policy-makers in the countries of the prospective of the European Monetary Union: the solvency of their government finances; and the accuracy of fiscal forecasts. Extending the existing methodology of solvency tests, the paper finds that, with few exceptions, EU governments are insolvent, albeit debt/GDP ratios show signs of stabilizing. The accuracy of official short-term fiscal forecasts (those of the OECD) is analysed using conventional techniques and found to be reassuring.