Cross-national variations in fiscal performance have traditionally been seen as resulting from differences in electoral systems and types of government. However, such politico-institutional explanations appear to be sensitive to the time-period analysed. This paper provides a new explanation of why some countries have managed to consolidate public finances, while others have accumulated unsustainable levels of debt. Using real-time data for a panel of 31 OECD countries over the 1997-2012 period, the paper shows that governments have responded to biased economic forecasts with more expansionary fiscal policies than they would have if projections had been unbiased. The estimated effects are large. On average, biased projections have weakened annual budget balances by approximately one per cent of GDP.