Generational accounting in open economies

Eric Fisher and Kenneth Kasa

Economic Review, 1997, 34-46

Abstract: Using data on U.S. and Japanese government debt, we calibrate a version of Weil's (1989) model and study the international and intergenerational consequences of recent fiscal policy. Assuming debt/GDP ratios stabilize at current levels, the model implies: (1) the world real interest rate rises by fewer than two basis points; (2) the United States runs small but persistent external deficits; and (3) current generations in the United States experience a slight increase in wealth, while future generations both at home and abroad suffer analogous decreases. Most of the wealth effects are intergenerational rather than international.

Keywords: Fiscal policy; Debts, Public (search for similar items in EconPapers)
Date: 1997
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Citations: View citations in EconPapers (4)

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