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Generational Accounting as a Tool to Assess Fiscal Sustainability: An Overview of the Methodology

Author

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  • Bonin, Holger

    () (IZA)

  • Patxot, Concepció

    () (University of Barcelona)

Abstract

The paper surveys the methodology of generational accounting, a tool for gauging intertemporal imbalance in government finances facing demographic transition. Starting from the fiscal balance rule providing the theoretical background, we review the methods of generational accountants for generating empirical projections of the items building up to the intertemporal government budget. We debate indication of generational redistribution by lifetime expected net tax payments and several indicators for fiscal sustainability found in the literature. Finally, the performance of generational accounts, which ignore behavioral and policy dynamics, is compared with that of generational welfare indicators based on overlapping generations general equilibrium models.

Suggested Citation

  • Bonin, Holger & Patxot, Concepció, 2004. "Generational Accounting as a Tool to Assess Fiscal Sustainability: An Overview of the Methodology," IZA Discussion Papers 990, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp990
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    References listed on IDEAS

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    1. 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.
    2. Kotlikoff, Laurence J, 1988. "Intergenerational Transfers and Savings," Journal of Economic Perspectives, American Economic Association, vol. 2(2), pages 41-58, Spring.
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    Cited by:

    1. ., 2012. "Migration impact assessment: a state of the art," Chapters,in: Migration Impact Assessment, chapter 1, pages 3-62 Edward Elgar Publishing.
    2. Muttur Ranganathan Narayana, 2016. "India’s Proposed Universal Health Coverage Policy: Evidence for Age Structure Transition Effect and Fiscal Sustainability," Applied Health Economics and Health Policy, Springer, vol. 14(6), pages 673-690, December.
    3. Kamil Dybczak, 2006. "Generational Accounts in the Czech Republic (in English)," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 56(7-8), pages 298-317, July.
    4. Kamil Dybczak, 2006. "Generational Accounts in the Czech Republic," Working Papers 2006/2, Czech National Bank, Research Department.
    5. Mark Connolly & Oleksandr Topachevskyi & Baudouin Standaert & Omayra Ortega & Maarten Postma, 2012. "The Impact of Rotavirus Vaccination on Discounted Net Tax Revenue in Egypt," PharmacoEconomics, Springer, vol. 30(8), pages 681-695, August.
    6. Nijkamp, P. & Poot, H.J., 2012. "Migration impact assessment: A state of the art," Serie Research Memoranda 0009, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    7. Poul Schou & Daniel le Maire & Steen Jørgensen, 2005. "Poor parents, rich children? - A hundred years of distribution," DREAM Working Paper Series 200501, Danish Rational Economic Agents Model, DREAM.
    8. Damla Haciibrahimoglu & Pinar Derin-Gure, 2013. "Generational Accounting in Turkey," ERC Working Papers 1301, ERC - Economic Research Center, Middle East Technical University, revised Jan 2013.

    More about this item

    Keywords

    fiscal sustainability; generational accounting; methodology; survey;

    JEL classification:

    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology

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