First, forecasting relationships that simultaneously use information from a large number of data series may be more robust than prediction equations based on only a few variables (Stock and Watson, 2003b).
There is growing evidence that most countries will miss their budgetary targets for 2003 by a significant margin and, in a number of cases, budgetary plans for 2004 are not reassuring. While the deterioration of budgetary balances mainly reflects the lower-than-anticipated economic growth, it is worrying to see that not all countries with severe imbalances have so far introduced sufficient consolidation measures.