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Fiscal policy, fairness between generations, and national saving

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  • Ray Barrell
  • Martin Weale

Abstract

We assess fiscal policy from the perspective of fairness between generations and the relationship between this and national saving, in the context where the United Kingdom is one of the lowest saving of all the OECD economies. Cross-section and pooled data suggest that governments are in a position to influence national saving and we set out a simple overlapping generation model to show the effects of national debt, of pay-as-you-benefit systems, and of legacies and movements to land prices as means of effecting transfers between generations. Having shown that governments can influence the distribution of resources between generations we then discuss three notions of fairness between generations: (i) that each cohort should pay its own way; (ii) that a social planner should reallocate resources between generations to achieve an inter-temporal optimum; and (iii) that resources should be reallocated so that generations alive at the same time have similar living standards. In the light of these observations we discuss appropriate responses to a variety of economic shocks and we conclude with implications for policy in the aftermath of the recession. Copyright 2010, Oxford University Press.

Suggested Citation

  • Ray Barrell & Martin Weale, 2010. "Fiscal policy, fairness between generations, and national saving," Oxford Review of Economic Policy, Oxford University Press, vol. 26(1), pages 87-116, Spring.
  • Handle: RePEc:oup:oxford:v:26:y:2010:i:1:p:87-116
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    File URL: http://hdl.handle.net/10.1093/oxrep/grq002
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    Cited by:

    1. Noemi Pena-Miguel & Javier Corral-Lage & J. Inaki De La Pena Esteban & University of the Basque Country (UPV/EHU), 2017. "A First Approach to a Public Financial Information System for Social Benefits," European Research Studies Journal, European Research Studies Journal, vol. 0(2A), pages 109-127.
    2. Bernard Gumah & Maxwell A. Aziabah, 2020. "“Our Lives Are Affected by Government Agencies†: Citizens’ Perception Survey as a Measure of Public Service Efficiency in Ghana," SAGE Open, , vol. 10(2), pages 21582440209, June.
    3. Duy-Tung Bui, 2018. "Fiscal policy and national saving in emerging Asia: challenge or opportunity?," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 8(2), pages 305-322, August.
    4. Afonso, António & Sousa, Ricardo M., 2011. "What are the effects of fiscal policy on asset markets?," Economic Modelling, Elsevier, vol. 28(4), pages 1871-1890, July.
    5. Paolo Pertile & Veronica Polin & Pietro Rizza & Marzia Romanelli, 2015. "The fiscal disadvantage of young Italians: a new view on consolidation and fairness," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 13(1), pages 27-51, March.
    6. Laurentiu Dumitru ANDREI & Petre BREZEANU, 2019. "Optimizing the Financial Structure of the State Treasury in Romania," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 180-195, June.

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