Research Papers

Measuring Federal Budgetary Balance Forecasting Accuracy And Bias

Measuring Federal Budgetary Balance Forecasting Accuracy And Bias

This study analyzes the Justin Trudeau government’s budget forecasts from 2016 to 2025 and finds that accuracy drops sharply beyond the first year.

Four-year-ahead projections were off by an average of $94.4 billion—roughly 4 percent of nominal GDP. While current-year estimates tended to be cautious, longer-term forecasts consistently overestimated fiscal health. The results point to a persistent optimism bias likely influenced by political incentives, raising concerns about transparency, credibility, and the usefulness of Canada’s long- term fiscal planning.