Population Aging and Fiscal Policy in Europe and the United States
In this paper, we compare the total size of intertemporal public liabilities (IPLs) of several European countries and the United States. We utilize the machinery of generational accounting in order to calculate the composition of the countries IPLs, that is the sum of the explicit and implicit liabilities embedded in the respective fiscal policies. The findings suggest that present fiscal policies of all countries with the exception of Ireland have positive intertemporal liabilities and, hence, are unsustainable over the long-term. The study also confirms the claim made by advocates of generational accounting that explicit debt is a poor indicator of long-term fiscal sustainability. Among all EMU participants, those with the highest implicit liabilities report the lowest explicit debt. However, countries with the smallest or negative implicit liabilities have rather high explicit debt levels in the base year of the calculations reported here - 1995.
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- Kotlikoff, L.J. & Raffelhuschen, B., 1999.
"Generational Accounting around the Globe,"
Norway; Department of Economics, University of Bergen
195, Department of Economics, University of Bergen.
- Jagadeesh Gokhale & Benjamin R. Page & John Sturrock, 1999. "Generational Accounts for the United States: An Update," NBER Chapters, in: Generational Accounting around the World, pages 489-518 National Bureau of Economic Research, Inc.
- Alan J. Auerbach & Jagadeesh Gokhale & Laurence J. Kotlikoff, 1991.
"Generational Accounts - A Meaningful Alternative to Deficit Accounting,"
NBER Working Papers
3589, National Bureau of Economic Research, Inc.
- 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.
- Alan J. Auerbach & Jagadeesh Gokhale & Laurence J. Kotlikoff, 1991. "Generational accounts: a meaningful alternative to deficit accounting," Working Paper 9103, Federal Reserve Bank of Cleveland.
- Cardarelli, Roberto & Sefton, James & Kotlikoff, Laurence J, 2000. "Generational Accounting in the UK," Economic Journal, Royal Economic Society, vol. 110(467), pages 547-574, November.
- 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.
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