December 2010
Whose Credibility is at Risk?
Recently, the Minister of Finance, once again, questioned the quality and credibility of the research undertaken by the Office of the Parliamentary Budget Officer (PBO). This related both to the PBO’s survey of the Infrastructure Stimulus Fund and the projections of the fiscal balance. On December 22, 2010, the International Monetary Fund (IMF) released its 2010 Article IV Consultation with Canada.
Read MoreDeficit Outcome for 2010-11 will be $7 billion lower than Forecast in October 2010 Update
For the first seven months of 2010-11, the deficit was estimated at $21.5 billion, down$10.4 billion from that estimated in the same period in 2009-100
Read MoreFiscal Forecasting is Neither a Science Nor an Art
There has always been, and continues to be, considerable skepticism concerning the federal government’s fiscal projections. During the 1990s and early 2000s, when projections of the budgetary balance were off by wide margins, the credibility of the Department of Finance’s forecasting abilities came under attack from both inside and outside the government. Because of public criticism, the Department of Finance commissioned two independent studies, one in 1994 and one in 2005 to examine the reasons underlying the inaccuracy of budget forecasts and how they might be improved.
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