International Tax and Public Finance

, Volume 19, Issue 3, pp 319–337

The effect of tax revenue budgeting errors on fiscal balance: evidence from the Swiss cantons


DOI: 10.1007/s10797-011-9189-5

Cite this article as:
Chatagny, F. & Soguel, N.C. Int Tax Public Finance (2012) 19: 319. doi:10.1007/s10797-011-9189-5


This study is an empirical analysis of the impact of direct tax revenue budgeting errors on fiscal deficits. Using panel data from 26 Swiss cantons between 1980 and 2002, we estimate a single equation model on the fiscal balance, as well as a simultaneous equation model on revenue and expenditure. We use new data on budgeted and actual tax revenue to show that underestimating tax revenue significantly reduces fiscal deficits. Furthermore, we show that this effect is channeled through decreased expenditure. The effects of over and underestimation turn out to be symmetric.


Fiscal deficits Tax revenue budgeting errors Swiss cantons Simultaneous equations model with panel data 

JEL Classification

C12 C33 H71 H72 

Copyright information

© Springer Science+Business Media, LLC 2011

Authors and Affiliations

  1. 1.Swiss Graduate School of Public AdministrationUniversity of LausanneChavannes-près-RenensSwitzerland
  2. 2.Department of EconomicsUniversity of Rennes 1Rennes cedexFrance

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