TAX PROJECTIONS AND ECONOMIC FORECASTS BY GOVERNMENT BUREAUCRATS: HIDDEN MANOEUVERINGS BEHIND FISCAL RECONSTRUCTION IN JAPAN

Authors


  • Fukushige was supported by JSPS, Grants-in-Aid for Scientific Research (B) 19330045 and (A) 22243026. The final version of the paper was completed when he visited the College of Population Studies at Chulalongkorn University and he is most appreciative of the hospitality shown during this visit, especially by the Deputy Dean, Dr Worawet Suwanrada. The authors are also very grateful to two anonymous referees for their helpful comments on this paper and Dr Keigo Kameda and other participants in the seminar at Kwansei Gakuin University and Policy Modeling Workshop at National Graduate Institute for Policy Studies (GRIPS) for their helpful comments on an earlier version of this paper.

Abstract

This paper investigates how the hidden manoeuvrings of governments' fiscal department bureaucrats affect tax projections and economic growth forecasts. The empirical results suggest that they underestimate their tax projections when these are based on their forecasts of government debt. We also analyze the manoeuvrings of fiscal bureaucrats on economic forecasts and find that their forecasts of economic growth rates depend on their own projections of government debt and fiscal deficits.

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