Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/88135
Authors: 
Bonin, Holger
Patxot, Concepció
Souto, Guadalupe
Year of Publication: 
2013
Series/Report no.: 
ZEW Discussion Papers 13-099
Abstract: 
This paper introduces a methodological innovation into Generational Accounting. By incorporating cyclically-adjusted balances into the forward-looking budget projections underlying the concept we isolate pure policy effects, which render comparisons of the fiscal sustainability indicators obtained across time and countries truly meaningful. We also show that a demographic effect and a debt effect may bias fiscal sustainability measures over time, and establish a routine to control for these effects in the generational accounting framework. An empirical application for Spain illustrates that our proposed decomposition of indicators is empirically relevant. Standard generational accounting suggests that fiscal sustainability in Spain improved substantially in preparing for EMU. However, calculation of the pure policy effects reveals that this has not been the case.
Subjects: 
Fiscal Sustainability
Demographic Ageing
Cyclically-Adjusted Budget Balance
Spain
JEL: 
E62
H55
Document Type: 
Working Paper

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