The Effect of underforecasting on the accuracy of revenue forecasts by State Governments
By: RODGERS, Robert
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Contributor(s): JOYCE, Philip.
Material type: 
ArticlePublisher: Malden, MA : Blackwell Publishers, jan./feb. 1996Public administration review : PAR 56, 1, p. 48-56Abstract: Do state budget officials regularly underforecast revenue collections, and, if so, why? Analysis of 336 forecast errors for the 50 states from fiscal year 1975 through fiscal year 1992 indicated that the revenues collected by the states have been, on average, 2.1 percent more than the revenues that were forecasted. During recessions, revenue forecasts were much more accurate than during economic expansions. The average forecast error during recessions was near zero, while the average forecast error during economic expansions was quite large. Interviews with state budget officials suggested to the authors that the reason why the forecasts of revenues have been so accurate during economic downturns and so inaccurate during periods of economic prosperity is because states routinely underforecast revenues
Do state budget officials regularly underforecast revenue collections, and, if so, why? Analysis of 336 forecast errors for the 50 states from fiscal year 1975 through fiscal year 1992 indicated that the revenues collected by the states have been, on average, 2.1 percent more than the revenues that were forecasted. During recessions, revenue forecasts were much more accurate than during economic expansions. The average forecast error during recessions was near zero, while the average forecast error during economic expansions was quite large. Interviews with state budget officials suggested to the authors that the reason why the forecasts of revenues have been so accurate during economic downturns and so inaccurate during periods of economic prosperity is because states routinely underforecast revenues
public administration review par
january/february 1996
volume 56 numero 1
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