OECD Journal on Budgeting

The OECD Journal on Budgeting is published three times per year. It draws on the best of the recent work of the OECD Working Party of Senior Budget Officials (SBO), as well as special contributions from finance ministries, academics and experts in the field and makes it available to a wider community in an accessible format. The journal provides insight on leading-edge institutional arrangements, systems and instruments for the allocation and management of resources in the public sector.

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Short- and long-term forecasting by the Netherlands Bureau for Economic Policy Analysis (CPB)

Science, witchcraft, or practical tool for policy?

CPB forecasts for the next year and for the next period of government should be seen as well-motivated estimates based on all recent information, plausible assumptions and expected trends. These assumptions and trends are partly based on econometric estimation methods and insights from economic theory. However, the economy is a chaotic system in which small events can have major effects at short notice. Even when major uncertainties and risks are well understood, it remains impossible to indicate where and when a little spark will kindle a great fire or when the bubble in (e.g.) the housing or stock market will burst. The more distant the look into the future, the more uncertain are the forecasts. For such long-term analyses, the CPB employs scenarios, extended sensitivity analyses and identification of major political choices. Policy making is like sailing in fog. The regular set of CPB forecasts helps to look forward and to monitor whether a change of course is necessary. Despite fundamental uncertainty about the future, the CPB forecasts provide a good base for political discussions and decision making, like a coalition agreement, budget and wage rate negotiations and defining a long-term policy strategy. These forecasts inform Dutch society, reduce transaction costs in economic and political decision making, and foster consensus on economic and fiscal policy.


JEL: H68: Public Economics / National Budget, Deficit, and Debt / Forecasts of Budgets, Deficits, and Debt; G17: Financial Economics / General Financial Markets / Financial Forecasting and Simulation; A11: General Economics and Teaching / General Economics / Role of Economics; Role of Economists; Market for Economists; F17: International Economics / Trade / Trade: Forecasting and Simulation; D80: Microeconomics / Information, Knowledge, and Uncertainty / Information, Knowledge, and Uncertainty: General; F47: International Economics / Macroeconomic Aspects of International Trade and Finance / Macroeconomic Aspects of International Trade and Finance: Forecasting and Simulation: Models and Applications; E17: Macroeconomics and Monetary Economics / General Aggregative Models / General Aggregative Models: Forecasting and Simulation: Models and Applications; C0: Mathematical and Quantitative Methods / General
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