MODELLING OF FISCAL SECTOR INDICATORS

Forecasts of the general government consolidated budget revenues are a key element in planning of expenditures of the consolidated budget, as well as in elaborating tax policy. This paper presents the advantages of calculating revenues and expenditures of the general government consolidated budget by using a macro-econometric model. It analyses the role of the government sector in Latvia's economy and the structure and dynamics of revenues and expenditures of the general government consolidated budget. The paper summarises approaches and factors that different macro-econometric models use for forecasting revenues and expenditures of the government budget. Latvian data are used to provide a statistical description of estimated econometric equations for calculating tax revenues and compensation of employees and social benefits. The paper also illustrates interrelations of indicators of the fiscal sector with other macroeconomic indicators in the Latvian macro-econometric model. From the results of calculations of the model with various conditions, an evaluation is given of how an increase in private consumption, investments and export influences tax revenues, tax burden and the main macroeconomic indicators.