The empirical determination of GDP elasticities for public revenue and expenditure in Germany is the subject of this research project. The study relies on a reliable, sound and generally accepted methodology and data base. In addition, a critical discussion of the validity of the elasticity procedure for calculating cyclically adjusted budget balance is provided. For the calculation of cyclically adjusted budget balances the method frequently employed, also by the European Commission, is a so-called elasticity procedure.
In Germany the analysis of elasticity is complicated by German reunification and the accompanying structural break. The determination of reliable estimated values thus requires an intense examination of the methodology and its corresponding applicability.
In a first step the elasticity procedure practised by the European Commission will be applied in detail, with the emphasis lying on the determination of the sensitivity parameter and its components. This is followed by an examination of the fundamental methodological issues in the determination of sensitivity parameters. Then a critical inspection is made of the applicability of the relevant procedures to the concrete case of Germany. This particularly involves the special features of the budget and tax system , the availability of information and data as well as the structural breaks especially because of reunification but also with regard to the revision of the system of National Accounts. Then the determination of GDP elasticity for public revenue and expenditure in Germany is carried out by means of the selected procedure.
Publications of the OECD, German Federal Statistical Office.
The results will be presented in the final report.
Thiess Büttner, Anita Dehne, Gebhard Flaig, Oliver Hülsewig und Peter Winkler, Berechnung der BIP-Elastizitäten öffentlicher Ausgaben und Einnahmen zu Prognosezwecken und Diskussion ihrer Volatilität, ifo Forschungsbericht Nr. 28 (in German), München, 2006.
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