Monitoring Budget Deficits-A Time Series Model for India

Monitoring Budget Deficits A Time Series Model for India Srinivasa Madhur Wilima Wadhwa This paper addresses some important issues arising out of the finance ministry's 'Technical Note on Monitoring Budget Deficits' relaesed in August 1990. The paper then develops a simple seasonal ARIMA model for monthly budget deficits and subjects it to forecasting tests. It is found that the out of sample forecasts generated from this model are superior to the B-J forecasts presented in the finance ministry's Technical Note. The paper ends by indicating the scope for further work in modelling the budget deficit.