Reforming Cyclical Adjustment in the Debt Brake: Respond to Revised Assessments with a Delay
Abstract In 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. T...
| Main Authors: | , , |
|---|---|
| Format: | Article |
| Language: | deu |
| Published: |
Springer
2022-11-01
|
| Series: | Wirtschaftsdienst |
| Online Access: | https://doi.org/10.1007/s10273-022-3324-z |
| _version_ | 1811208048610377728 |
|---|---|
| author | Jana Kremer Jan Kuckuck Karsten Wendorff |
| author_facet | Jana Kremer Jan Kuckuck Karsten Wendorff |
| author_sort | Jana Kremer |
| collection | DOAJ |
| description | Abstract In 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. |
| first_indexed | 2024-04-12T04:15:43Z |
| format | Article |
| id | doaj.art-73037c19cd334bf1bd8e2525995b7688 |
| institution | Directory Open Access Journal |
| issn | 1613-978X |
| language | deu |
| last_indexed | 2024-04-12T04:15:43Z |
| publishDate | 2022-11-01 |
| publisher | Springer |
| record_format | Article |
| series | Wirtschaftsdienst |
| spelling | doaj.art-73037c19cd334bf1bd8e2525995b76882022-12-22T03:48:24ZdeuSpringerWirtschaftsdienst1613-978X2022-11-011021183083310.1007/s10273-022-3324-zReforming Cyclical Adjustment in the Debt Brake: Respond to Revised Assessments with a DelayJana Kremer0Jan Kuckuck1Karsten Wendorff2Öffentliche Finanzen in Deutschland, Deutsche BundesbankÖffentliche Finanzen in Deutschland, Deutsche BundesbankÖffentliche Finanzen, Deutsche BundesbankAbstract In 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.https://doi.org/10.1007/s10273-022-3324-z |
| spellingShingle | Jana Kremer Jan Kuckuck Karsten Wendorff Reforming Cyclical Adjustment in the Debt Brake: Respond to Revised Assessments with a Delay Wirtschaftsdienst |
| title | Reforming Cyclical Adjustment in the Debt Brake: Respond to Revised Assessments with a Delay |
| title_full | Reforming Cyclical Adjustment in the Debt Brake: Respond to Revised Assessments with a Delay |
| title_fullStr | Reforming Cyclical Adjustment in the Debt Brake: Respond to Revised Assessments with a Delay |
| title_full_unstemmed | Reforming Cyclical Adjustment in the Debt Brake: Respond to Revised Assessments with a Delay |
| title_short | Reforming Cyclical Adjustment in the Debt Brake: Respond to Revised Assessments with a Delay |
| title_sort | reforming cyclical adjustment in the debt brake respond to revised assessments with a delay |
| url | https://doi.org/10.1007/s10273-022-3324-z |
| work_keys_str_mv | AT janakremer reformingcyclicaladjustmentinthedebtbrakerespondtorevisedassessmentswithadelay AT jankuckuck reformingcyclicaladjustmentinthedebtbrakerespondtorevisedassessmentswithadelay AT karstenwendorff reformingcyclicaladjustmentinthedebtbrakerespondtorevisedassessmentswithadelay |