Fiscal Sustainability and Generational Burden Sharing in Denmark

Svend E. Hougaard Jensen, Ulrik Nødgaard and Lars Haagen Pedersen

Nordic Journal of Political Economy, 2002, vol. 28, 43-60

Abstract: Based on generational accounts and a simple welfare calculus, this paper studies two alternative scenarios of sustainable fiscal policy in Denmark. A strategy of tax smoothing is found to provide a fairly even intergenerational distribution of the financial burden associated with population ageing. While tax smoothing causes a relatively sharp increase in public debt along the transition path, a strategy of debt smoothing is shown to pass a larger part of the financial burden onto current generations but without changing the intergenerational distribution profile in any dramatic way. A comparison based on a social welfare function indicates a marginal superiority of tax smoothing.

JEL-codes: E62 (search for similar items in EconPapers)
Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:noj:journl:v:28:y:2002:p:43-60

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