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Public finances in the European Union: Is convergence sustainable?

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  • Bonin, Holger
  • Raffelhüschen, Bernd

Abstract

In this paper, we discuss the latest generational accounting results for 12 of the 15 EU member states, which were prepared on behalf of the European Commission by an international team of experts. We proceed as follows: Section 2 summarises the characteristic features of the standardised generational accounting concept on which the computations were based. Section 3 investigates the divergence of the European countries in terms of long-run fiscal sustainability, and attempts to work out the fundamental forces behind this outcome. Section 4 focuses on the long-term state of fiscal policy in Germany and the UK. This seems instructive, since the two states run markedly contrasted public pension systems. Counterfactual experiments are used to assess the potential for more balanced fiscal policy. Section 5 concludes the paper.

Suggested Citation

  • Bonin, Holger & Raffelhüschen, Bernd, 1999. "Public finances in the European Union: Is convergence sustainable?," Discussion Papers 77, Albert-Ludwigs-Universität Freiburg, Institut für Finanzwissenschaft.
    • Handle: RePEc:zbw:alufin:77
    DOI: 10.6094/UNIFR/13492
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    1. Juergen Jerger & Jochen Michaelis, 1997. "On the Employment Effect of Manning Rules," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 153(3), pages 545-545, September.
    2. 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.
    3. Laurence J. Kotlikoff & Laurence J. Kotlikoff & Willi Leibfritz, 1999. "From Deficit Delusion to the Fiscal Balance Rule: Looking for an Economically Meaningful Way to Assess Fiscal Policy," NBER Chapters, in: Generational Accounting around the World, pages 9-30, National Bureau of Economic Research, Inc.
    4. 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.
    5. Auerbach, Alan J & Gokhale, Jagadeesh & Kotlikoff, Laurence J, 1992. " Generational Accounting: A New Approach to Understanding the Effects of Fiscal Policy on Saving," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(2), pages 303-318.
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    Cited by:

    1. Hannes Rehm, 2006. "New Approaches to a Fiscally-Oriented Debt Management Strategy: Objectives, Instruments, and Risks," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 61(4), pages 587-608, February.

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    More about this item

    Keywords

    Sustainable Public Finances; Generational Accounting; European Union;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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