IDEAS home Printed from https://ideas.repec.org/a/mhr/finarc/urnsici0015-2218(200207)583_227gavcge_2.0.tx_2-q.html
   My bibliography  Save this article

Generational Accounting versus Computable General Equilibrium

Author

Listed:
  • Volker Börstinghaus
  • Georg Hirte

Abstract

Generational Accounting is only a shortcut to a general equilibrium analysis because it is assumed that individual decisions are unaffected by policy reforms. Nonetheless only two studies examine the accuracy of Generational Accounting, but Fehr and Kotlikoff (1996) consider changes in individual decisions and current tax adaptations to balance the Budget. Thus their approach is inappropriate as a means to compare both methods as they are used in reality. Raffelhüschen and Risa (1997) use a very simple model and simulate very stylized policy changes. So we need to carry out a new examination. Our examples are the recent fiscal reforms in Germany which encompass an income tax reform and a pension reform. The findings are that Generational Accounting is a bad shortcut for the incidence of the income tax reform, but gives a good impression of the quality and sign of the incidence for all but the younger cohorts in the case of the pension reform, and that the Fehr and Kotlikoff approach is misleading.

Suggested Citation

  • Volker Börstinghaus & Georg Hirte, 2002. "Generational Accounting versus Computable General Equilibrium," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 58(3), pages 227-243, July.
    • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200207)58:3_227:gavcge_2.0.tx_2-q
    as

    Download full text from publisher

    File URL: https://www.mohrsiebeck.com/en/article/generational-accounting-versus-computable-general-equilibrium-1016280015221022905894
    Download Restriction: Fulltext access is included for subscribers to the printed version.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Diamond, Peter, 1996. "Generational Accounts and Generational Balance: An Assessment," National Tax Journal, National Tax Association;National Tax Journal, vol. 49(4), pages 597-607, December.
    2. Homburg, Stefan, 1997. "Old-age Pension Systems: A Theoretical Evaluation," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 233-246.
    3. Alan J. Auerbach & Jagadeesh Gokhale & Laurence J. Kotlikoff, 1991. "Generational Accounts: A Meaningful Alternative to Deficit Accounting," NBER Chapters, in: Tax Policy and the Economy, Volume 5, pages 55-110, National Bureau of Economic Research, Inc.
    4. Laurence J. Kotlikoff, 1996. "Privatization of Social Security: How It Works and Why It Matters," NBER Chapters, in: Tax Policy and the Economy, Volume 10, pages 1-32, National Bureau of Economic Research, Inc.
    5. Homburg, Stefan, 1990. "The Efficiency of Unfunded Pension Schemes," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 146, pages 640-647.
    6. Menahem E. Yaari, 1965. "Uncertain Lifetime, Life Insurance, and the Theory of the Consumer," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 32(2), pages 137-150.
    7. Hirte Georg, 2002. "Welfare and Macroeconomic Effects of the German Pension Acts of 1992 and 1999: A Dynamic CGE Study," German Economic Review, De Gruyter, vol. 3(1), pages 81-106, February.
    8. Alan J. Auerbach & Jagadeesh Gokhale & Laurence J. Kotlikoff, 1994. "Generational Accounting: A Meaningful Way to Evaluate Fiscal Policy," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 73-94, Winter.
    9. L. F. G. De Cazaux, 1965. "On The Budget," Journal of Accounting Research, Wiley Blackwell, vol. 3(2), pages 264-265.
    10. Auerbach, Alan J. & Kotlikoff, Laurence J. & Leibfritz, Willi (ed.), 1999. "Generational Accounting around the World," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226032139, December.
    11. Rafflhuschen, B. & Risa, A.E., 1997. "Generational Accounting and intergenerational Welfare," Norway; Department of Economics, University of Bergen 164, Department of Economics, University of Bergen.
    12. Robert Haveman, 1994. "Should Generational Accounts Replace Public Budgets and Deficits?," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 95-111, Winter.
    13. Unknown, 2001. "General Discussion," Proceedings of the 6th Agricultural and Food Policy Systems Information Workshop, 2000: Trade Liberalization Under NAFTA: Report Card on Agriculture 16839, Farm Foundation, Agricultural and Food Policy Systems Information Workshops.
    14. Alan J. Auerbach & Laurence J. Kotlikoff & Willi Leibfritz, 1999. "Generational Accounting around the World," NBER Books, National Bureau of Economic Research, Inc, number auer99-1, March.
    15. Hirte, Georg, 2001. "Pension Policies for an Aging Society," Beiträge zur Finanzwissenschaft, Mohr Siebeck, Tübingen, edition 1, volume 14, number urn:isbn:9783161475399, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Benz Ulrich & Hagist Christian, 2008. "Konjunktur und Generationenbilanz – eine Analyse anhand des HP-Filters / Business Cycle Effects on Generational Accounting – An Analysis using the HP-Filter," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 228(4), pages 299-316, August.
    2. Concepció Patxot & Elisenda Rentería & Miguel Romero & Guadalupe Souto, 2012. "Measuring the balance of government intervention on forward and backward family transfers using NTA estimates: the modified Lee arrows," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(3), pages 442-461, June.
    3. Holger Bonin & Concepció Patxot & Guadalupe Souto, 2014. "Cyclically‐Neutral Generational Accounting," Fiscal Studies, Institute for Fiscal Studies, vol. 35, pages 117-137, June.
    4. Veronika Deeg & Christian Hagist & Stefan Moog, 2009. "The fiscal outlook in Austria: an evaluation with Generational Accounts," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 36(4), pages 475-499, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kotlikoff, Laurence J., 2002. "Generational policy," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 27, pages 1873-1932, Elsevier.
    2. Hsieh, Kevin Yu-Ching & Tung, An-Chi, 2016. "Taiwan’s National Pension Program: A remedy for rapid population aging?," The Journal of the Economics of Ageing, Elsevier, vol. 8(C), pages 52-66.
    3. Fehr, Hans, 1999. "Welfare Effects of Dynamic Tax Reforms," Beiträge zur Finanzwissenschaft, Mohr Siebeck, Tübingen, edition 1, volume 5, number urn:isbn:9783161470165, September.
    4. Shimasawa, Manabu & Oguro, Kazumasa & Masujima, Minoru, 2014. "Population Aging, Policy Reforms, and Lifetime Net Tax Rate in Japan: A Generational Accounting Approach," CIS Discussion paper series 625, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    5. A. Bovenberg & Harry Rele, 2000. "Generational Accounts for The Netherlands: An Update," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(4), pages 411-430, August.
    6. Martin Larch & João Nogueira Martins, 2007. "Fiscal indicators - Proceedings of the the Directorate-General for Economic and Financial Affairs Workshop held on 22 September 2006 in Brussels," European Economy - Economic Papers 2008 - 2015 297, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    7. Leon Bettendorf & A. Horst & N. Draper & C. Ewijk & R. Mooij & H. Rele, 2011. "Ageing and the Conflict of Interest Between Generations," De Economist, Springer, vol. 159(3), pages 257-278, September.
    8. SHIMASAWA Manabu & OGURO Kazumasa, 2016. "Will Abenomics Save Future Generations?," Discussion papers 16100, Research Institute of Economy, Trade and Industry (RIETI).
    9. Bonin, Holger, 2001. "Fiskalische Effekte der Zuwanderung nach Deutschland - Eine Generationenbilanz," IZA Discussion Papers 305, Institute of Labor Economics (IZA).
    10. Holger Bonin, 2002. "Eine fiskalische Gesamtbilanz der Zuwanderung nach Deutschland," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 71(2), pages 215-229.
    11. Bernd Raffelhuschen & Laurence J. Kotlikoff, 1999. "Generational Accounting around the Globe," American Economic Review, American Economic Association, vol. 89(2), pages 161-166, May.
    12. André Decoster & Xavier Flawinne & Pieter Vanleenhove, 2014. "Generational accounts for Belgium: fiscal sustainability at a glance," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 41(4), pages 663-686, November.
    13. John Ablett & Zaid Tseggai‐Bocurezion, 2000. "Lifetime Net Average Tax Rates in Australia Since Federation—A Generational Accounting Study," The Economic Record, The Economic Society of Australia, vol. 76(233), pages 139-151, June.
    14. Georg Hirte, 2003. "The Political Feasibility of Privatizing Old‐Age Insurance," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(4), pages 507-525, September.
    15. Siebert, Horst, 1997. "Pay-as-you-go versus capital funded pension systems: the issues," Kiel Working Papers 816, Kiel Institute for the World Economy (IfW Kiel).
    16. Alan J. Auerbach & Young Jun Chun & Ilho Yoo, 2005. "The Fiscal Burden of Korean Reunification: A Generational Accounting Approach," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 61(1), pages 62-97, March.
    17. Holger Bonin & Concepció Patxot & Guadalupe Souto, 2014. "Cyclically‐Neutral Generational Accounting," Fiscal Studies, Institute for Fiscal Studies, vol. 35, pages 117-137, June.
    18. Gemma Abío & Eduard Berenguer & Holger Bonin & Joan Gil & Concepció Patxot, 2003. "Is the deficit under control? A generational accounting perspective on fiscal policy and labour market trends in Spain," Investigaciones Economicas, Fundación SEPI, vol. 27(2), pages 309-341, May.
    19. Omar Aziz & Norman Gemmell & Athene Laws, 2016. "Income and Fiscal Incidence by Age and Gender: Some Evidence from New Zealand," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(3), pages 534-558, September.
    20. Koch, Daniel, 2011. "Wirksame Begrenzung von Staatsverschuldung auf europäischer Ebene," Discussion Paper Series 114, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.

    More about this item

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mhr:finarc:urn:sici:0015-2218(200207)58:3_227:gavcge_2.0.tx_2-q. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Thomas Wolpert (email available below). General contact details of provider: https://www.mohrsiebeck.com/fa .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.