The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Generational Accounting

  • Jagadeesh Gokhale
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_2091

Abstract

Many government programmes transfer resources between different population groups. Programmes to provide retirement and health security levy taxes on workers to finance transfers to retirees. Initiating or expanding such programmes often redistributes wealth across generations by altering their lifetime tax burdens. Although standard budget measures such as national debt and deficits do not fully reflect them, such public intergenerational redistributions could substantially affect different generations’ economic choices. Generational accounting measures the size of prospective net tax burdens facing different generations under current government tax and expenditure policies. It also analyses how those fiscal burdens would change under alternative policies.

Keywords

Aging populations Budget deficits Consumption Fiscal burden Fiscal policy Generational accounting Generational balance Gifts Government intertemporal budget constraint Inheritance and bequests Intergenerational transfers Income taxes Labour productivity Labour supply Labour-force participation Lifetime net tax rates National debt Redistribution of income and wealth Risk Saving Sensitivity analysis Social insurance Wealth 
This is a preview of subscription content, log in to check access

Bibliography

  1. Auerbach, A., J. Gokhale, and L. Kotlikoff. 1991. Generational accounts: A meaningful alternative to deficit accounting. In Tax policy and the economy, vol. 5, ed. D. Bradford. Cambridge, MA: MIT Press/NBER.Google Scholar
  2. Auerbach, A., J. Gokhale, and L. Kotlikoff. 1994. Generational accounting: A meaningful way to evaluate fiscal policy. Journal of Economic Perspectives 8(1): 73–94.CrossRefGoogle Scholar
  3. Congressional Budget Office. 2006. Historical budget data, 26 January, Table 4. Online. Available at http://www.cbo.gov/budget/historical.pdf. Accessed 28 June 2006.
  4. Diamond, P. 1996. Generational accounting and generational balance: An assessment. National Tax Journal 49: 597–607.Google Scholar
  5. Feldstein, M. 1974. Social Security, induced retirement, and aggregate capital accumulation. Journal of Political Economy 82: 905–926.CrossRefGoogle Scholar
  6. Gokhale, J., L. Kotlikoff, and J. Sabelhaus. 1996. Understanding the postwar decline in U.S. saving: A cohort analysis. Brookings Papers on Economic Activity 1996(1): 315–407.CrossRefGoogle Scholar
  7. Gokhale, J., and K. Smetters. 2003. Fiscal and generational imbalances: New budget measures for new budget priorities. Washington, DC: American Enterprise Institute Press.Google Scholar
  8. Gokhale, J., and K. Smetters. 2006. Fiscal and generational imbalances: An update. In Tax policy and the economy, vol. 20, ed. J. Poterba. Cambridge, MA: MIT Press/NBERGoogle Scholar
  9. Kotlikoff, L., and H. Fehr. 1996/97. Generational accounting in general equilibrium. Finanzarchiv 53: 1–27.Google Scholar
  10. Kotlikoff, L. 1997. Reply to Cutler’s and Diamond’s views on generational accounting. National Tax Journal 50: 303–314.Google Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Jagadeesh Gokhale
    • 1
  1. 1.