Generational Accounting as a Tool to Assess Fiscal Sustainability: An Overview of the Methodology

Holger Bonin (holger.bonin@ihs.ac.at) and Concepció Patxot

No 990, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The paper surveys the methodology of generational accounting, a tool for gauging intertemporal imbalance in government finances facing demographic transition. Starting from the fiscal balance rule providing the theoretical background, we review the methods of generational accountants for generating empirical projections of the items building up to the intertemporal government budget. We debate indication of generational redistribution by lifetime expected net tax payments and several indicators for fiscal sustainability found in the literature. Finally, the performance of generational accounts, which ignore behavioral and policy dynamics, is compared with that of generational welfare indicators based on overlapping generations general equilibrium models.

Keywords: fiscal sustainability; generational accounting; methodology; survey (search for similar items in EconPapers)
JEL-codes: B41 E62 H61 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2004-01
New Economics Papers: this item is included in nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Published - published in: E. Berenguer (ed.), Generational Accounting in Spain, Madrid: IFS, 2005, 27-66

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