The name is absent

(2006) we also plotted the cyclically adjusted deficits, based on final estimates of the
output gap and its uncertainty (SD). Unsurprisingly these indicate less uncertainty about
the central estimate than the real-time estimates. In any case, Figures 7.1-7.7 below plot
alongside the real-time cyclically adjusted budget deficit and the predicted degree of
uncertainty, the final (point) estimate for the cyclically adjusted budget deficit.
Differences between this and the real-time estimates indicate further the potential for
making policy-mistakes in real-time. In each chart we also plot the outturn for the deficit.

Our budget deficit data have not been adjusted for any of the myriad of one-off measures
we have seen in the last decade in Europe; hence we include mobile phone receipts in the
deficit. This explains why most countries go into surplus around 2000. After 2002, when
these receipts fade away, Germany and Italy show cyclically adjusted deficits that are
more than 2 standard deviations away from zero, suggesting it is very unlikely that they
could ever be judged to have been ‘in balance or surplus’. France on the other hand has a
cyclically adjusted deficit that just about includes zero within its 95% confidence bounds;
but this reflects the noticeably greater uncertainty about the French output gap than that in
the other countries. The Netherlands, Belgium and Spain are all close to balance or in
surplus in a cyclically adjusted way in the last few years. The UK has been in a
statistically significant deficit position for some years, but this judgement is both
marginal, and less pressing than for France, for instance, because the UK is not a member
of EMU.

Inspection of Figures 7.1 to 7.7 also shows that the actual deficit falls within the
confidence bands, which could have been computed in real-time, around the cyclical
adjusted budget deficit. This is not surprising, and perhaps not a source of great relief,
given how wide the degree of uncertainty associated with the real-time estimates is.

The real time estimates of the CAB for France suggest that the country was in sustained
deficit with little chance of achieving its commitments. However, there was a sustained
improvement in the run up to EMU, with zero being well inside the uncertainty bounds
for some years. After the formation of EMU, fiscal discipline appears to have been
reduced, and zero drops out of the bounds.

193

<<   183   184   185   186   187   188   189   >>

More intriguing information