Factors associated with public sector revenue budget forecasting errors
DOI:
https://doi.org/10.21118/apgs.v14i2.12945Abstract
Research Objective: Forecast error was checked from the perspective of political factors and economic factors, aiming to verify which factors may be associated with forecast errors of public sector budget revenue
Theoretical framework: This paper is based on the economic theory of adaptive expectations, which indicates that economic agents formulate expectations for the future based on past facts.
Methodology: The research sample covers all Brazilian municipalities, in the period from 2015 to 2018. The model used was panel data and the estimation method was via fixed effects with White's robust estimator.
Results: The results indicate that municipalities that make mistakes today tend on average to continue making mistakes in the future, and thus causing, for example, the overestimation of revenue, which can then harm the execution of expenses, causing an increase in the public deficit, increase in expenses entered in rests payable among other problems. The implication of these results indicates, above all, that municipalities, before worrying about exogenous issues to manage this forecast error, should worry about internal factors such as better forecasting models.
Originality: This paper differs from the others, as it uses political economic factors, testing whether these variables are associated with forecast error in municipalities in Brazil.
Theoretical and practical contributions: This study shows relevant information on the continuous error of budget forecasts, thus allowing municipal public managers to assess future decisions on resources that will be provided for the execution of products and services offered to society.
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