If OECD forecasts also reflect these policy
announcements, then the VAR-based innovations should be correlated with the OECD
forecasts. Table 3 displays estimates of regressions of the reduced form residuals of government
spending and of net taxes in quarter t of year j from the benchmark VAR, on
the two most recently published forecasts of government spending and GDP growth for
year j. With the exception of government spending in the UK and net taxes in the US,
there is little evidence that the VAR innovations are predictable.