Generational Accounts, Aggregate Savings, and Intergenerational Distribution
Are generational accounts informative about the effect of the budget on the intergenerational distribution of resources and on aggregate saving? First, the usefulness of generational accounts lives or dies with the strict life-cycle model of household consumption. Second, even if the life-cycle model holds, generational accounts ignore the intergenerational redistribution associated with the government’s provision of public goods and services and with intergenerational externalities. Third, generational accounting ignores the effect of the budget on tax and transfer bases and on before-tax incomes and prices. That is, it does not handle incidence or general equilibrium repercussions.
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- 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,"
in: Generational Accounting around the World, pages 9-30
National Bureau of Economic Research, Inc.
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9107, Federal Reserve Bank of Cleveland.
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- Willem H. Buiter, 1990. "Principles of Budgetary and Financial Policy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262524139, December.
- 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.
- Yotsuzuka, Toshiki, 1987. "Ricardian equivalence in the presence of capital market imperfections," Journal of Monetary Economics, Elsevier, vol. 20(2), pages 411-436, September.
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