An Empirical Analysis of the Canadian Budget Process

Abstract

Dans cette étude nous examinons les erreurs de prévisions pour les comptes de dépenses et recettes du budget canadien. Nous appliquons des méthodes non-paramétriques à cause des petites tailles d'échantillons. Nous trouvons peu d'erreurs systématiques dans les prévisions budgétaires.

This paper provides a statistical analysis of the forecasts of significant number of expenditure and revenue components of the Federal budget provided each year by the Department of Finance. The sample available for such an investigation is limited and we describe an easily-applied nonparametric testing methodology which is more appropriate than the usual regression-based approach in small samples. The reliability and relative power of the various nonparametric tests are illustrated in a series of simulations. Applying these tests to the fiscal forecasts, we find that there is little cause to be concerned with the forecast performance of the Department of Finance over the last seventeen years.