Net Taxes of Living Generations

Abstract

The previous chapter illustrated the relevance of present value life cycle net taxes, henceforth referred to as generational accounts, on individual consumption and savings decisions, which in turn affect the equilibrium growth path of the economy and the generational distribution of consumption opportunities. Furthermore, it was shown that fiscally balanced policy avoiding generational redistribution by the government sector, would require to set fiscal choice parameters so as to meet the steady-state budget constraint of the public sector, and to maintain life cycle taxes across generations.