Over-optimism in Forecasts by Official Budget Agencies and Its Implications
Science discovers the obvious: Government agencies are routinely over-optimistic in their budget forecasts. From the abstract:
The paper studies forecasts of real growth rates and budget balances made by official government agencies among 33 countries. In general, the forecasts are found:
- to have a positive average bias
- to be more biased in booms
- to be even more biased at the 3-year horizon than at shorter horizons.
This over-optimism in official forecasts can help explain excessive budget deficits, especially the failure to run surpluses during periods of high output: if a boom is forecasted to last indefinitely, retrenchment is treated as unnecessary. Many believe that better fiscal policy can be obtained by means of rules such as ceilings for the deficit or, better yet, the structural deficit. But we also find [that] countries subject to a budget rule, in the form of euroland’s Stability and Growth Path, make official forecasts of growth and budget deficits that are even more biased and more correlated with booms than do other countries. [emphasis mine]
In related news, it is now more than 800 days since the Democratically-controlled Senate has passed or even proposed a budget, as they are required to do by law.
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Science discovers the obvious: Government agencies are routinely over-optimistic in their budget forecasts. From the abstract:
The paper studies forecasts of real growth rates and budget balances made by official government agencies among 33 countries. In general, the forecasts are found:
- to have a positive average bias
- to be more biased in booms
- to be even more biased at the 3-year horizon than at shorter horizons.
This over-optimism in official forecasts can help explain excessive budget deficits, especially the failure to run surpluses during periods of high output: if a boom is forecasted to last indefinitely, retrenchment is treated as unnecessary. Many believe that better fiscal policy can be obtained by means of rules such as ceilings for the deficit or, better yet, the structural deficit. But we also find [that] countries subject to a budget rule, in the form of euroland’s Stability and Growth Path, make official forecasts of growth and budget deficits that are even more biased and more correlated with booms than do other countries. [emphasis mine]
In related news, it is now more than 800 days since the Democratically-controlled Senate has passed or even proposed a budget, as they are required to do by law.
Readers!
My annual February birthday fund-raising drive for Behind the Black is now over. Thank you to everyone who donated or subscribed. While not a record-setter, the donations were more than sufficient and slightly above average.
As I have said many times before, I can’t express what it means to me to get such support, especially as no one is required to pay anything to read my work. Thank you all again!
For those readers who like my work here at Behind the Black and haven't contributed so far, please consider donating or subscribing. My analysis of space, politics, and culture, taken from the perspective of an historian, is almost always on the money and ahead of the game. For example, in 2020 I correctly predicted that the COVID panic was unnecessary, that the virus was apparently simply a variation of the flu, that masks were not simply pointless but if worn incorrectly were a health threat, that the lockdowns were a disaster and did nothing to stop the spread of COVID. Every one of those 2020 conclusions has turned out right.
Your help allows me to do this kind of intelligent analysis. I take no advertising or sponsors, so my reporting isn't influenced by donations by established space or drug companies. Instead, I rely entirely on donations and subscriptions from my readers, which gives me the freedom to write what I think, unencumbered by outside influences.
You can support me either by giving a one-time contribution or a regular subscription. There are four ways of doing so:
1. Zelle: This is the only internet method that charges no fees. All you have to do is use the Zelle link at your internet bank and give my name and email address (zimmerman at nasw dot org). What you donate is what I get.
2. Patreon: Go to my website there and pick one of five monthly subscription amounts, or by making a one-time donation.
3. A Paypal Donation or subscription:
4. Donate by check, payable to Robert Zimmerman and mailed to
Behind The Black
c/o Robert Zimmerman
P.O.Box 1262
Cortaro, AZ 85652
You can also support me by buying one of my books, as noted in the boxes interspersed throughout the webpage or shown in the menu above.
In my honest opinion IF America is going to be visiting an asteroid it’s going to be conducted by the private sector and not NASA (or a combo of NASA and the private sector) due to the deficit.
However I think the private sector (led by SpaceX and Bigelow Aerospace) will establish outposts upon the Moon before 2040 (I’d say before 2020 but if we enter a recession it could take longer).