AN EMPIRICAL-ANALYSIS OF THE CANADIAN BUDGET PROCESS

This paper provides a statistical analysis of the forecasts of a signi ficant number of expenditure and revenue components of the federal bud get provided each year by the Department of Finance. The sample availa ble for such an investigation is limited, and we describe an easily ap plied non-parametric testing methodology that is more appropriate than the usual regression-based approach in small samples. The reliability and relative power of the various non-parametric tests are illustrate d in a series of simulations. Applying these tests to the fiscal forec asts, we find that there is little cause to be concerned with the fore cast performance of the Department of Finance over the last seventeen years.