Understanding and Confronting Uncertainty: Revisions to UK Government Expenditure Plans
Presented by Jagjit Chadha, National Institute of Economic and Social Research
ESCoE Research Seminar, Tuesday 27 November 2018, 16.30-17.30
Venue: Office for National Statistics, 1 Drummond Gate, London, SW1V 2QQ
We develop a simple model to motivate fiscal stabilisation policy, in the presence of economic and control uncertainty. We then examine a real-time database of economic variables and forecasts shows to demonstrate the extent to which our understanding of current and future state of the economy is subject to significant changes over time. And that these changes are, at least in part, linked to data revisions. We go on to show that multi-year government spending plans are also significantly revised over successive fiscal events. We illustrate the risk for any given government expenditure plan by constructing measures of historical expenditure revisions. I show how it would be possible to construct a model-based stress of these expenditure paths. We also show that the most significant factor in explaining public expenditure revisions are changes to the expected path of GDP growth. We illustrate one way to model the components of public expenditure and are thus able to remark on the extent to which expenditure is warranted. Finally an interpretation of the expenditure paths announced in the Budget based on our analysis is presented.
Jagjit Chadha is Director of the National Institute of Economic and Social Research. His research has concentrated on macroeconomic policy making under uncertainty. His papers can be accessed at: https://econpapers.repec.org/RAS/pch64.htm
The event is free but registration is required. To ensure attendance please RSVP to: escoeRSVP@niesr.ac.uk.
ESCoE Research Seminars are usually held fortnightly at 16:30 – 17:30 on Tuesdays during Term time. The schedule for forthcoming seminars is available here: https://www.escoe.ac.uk/events/seminars/
Please note: Your passport or other official ID will be required for registration. Please ensure you bring the original of your ID.
Registration opens from 16:00 with tea and coffee available on arrival.
Friday, November 09, 2018