ISBN: 3540422668
TITLE: Generational Accounting
AUTHOR: Bonin
TOC:

1. The Rationale for Generational Accounting 1
1.1 Deficit Accounting and Generational Redistribution 2
1.2 Generational Redistribution and the Economy 5
1.2.1 An Overlapping Generations Model 5
1.2.2 The Fiscal Balance Rule 8
2. Net Taxes of Living Generations 13
2.1 Generational Accounts Defined 14
2.2 The Meaning of Net Taxes 16
2.3 The Projection of Taxes and Transfers 20
2.4 Accounting for Economic Growth 25
2.5 General Equilibrium Considerations 29
2.6 Breaking Down Generational Accounts 32
2.7 Ambiguities of Generational Accounts 33
3. The Intertemporal Public Budget 37
3.1 The Intertemporal Budget Constraint 37
3.2 Determinants of Government Wealth 40
3.3 The No-Ponzi Game Condition 44
3.4 The Mechanics of the Intertemporal Budget 46
4. Assessing Fiscal Imbalance 49
4.1 The Residual Approach 49
4.2 The Conventional Sustainability Index 54
4.3 Subgroup Accounts and Fiscal Sustainability 58
4.4 Sustainability and Generational Redistribution 61
4.5 Analytical Shortcomings of the Residual Approach 67
4.5.1 Ambiguous Policy Implications 68
4.5.2 Sensitivity to the Concept of Net Taxes 70
4.5.3 Fiscal Policy Indicators 72
4.6 The Sustainability Approach 77
4.6.1 The Sustainability Gap 78
4.6.2 A Set of Sustainability Indicators 81
5. The Intertemporal State of German Public Finances 93
5.1 Introduction 93
5.2 The Demographic and Fiscal Scenarios 98
5.2.1 Demographic Scenarios 98
5.2.2 Relative Tax and Government Spending Profiles 106
5.2.3 Aggregate Budget and Absolute Net Tax Payments 117
5.2.4 The Future Economic Environment 125
5.3 Generational Redistribution in Germany 132
5.3.1 Net Tax Burdens of Present Generations 132
5.3.2 Intertemporal Fiscal Imbalance 142
5.3.3 Sensitivity Analysis 151
6. Immigration Policy and Fiscal Sustainability 163
6.1 Immigration and Generational Accounting 163
6.2 Migration Scenarios and Parameter Estimates 166
6.3 The Fiscal Contribution of Immigrants 174
6.3.1 Generational Accounts by Resident Group 174
6.3.2 Immigrant Cohort Deficits 179
6.3.3 The Sustainability Impacts of Immigration Policies 181
6.4 Conclusion 187
7. Options for Social Security Reform 189
7.1 Social Security and Fiscal Sustainability in Germany 189
7.2 The Measurement of Generational Reform Burdens 204
7.3 The Generational Impacts of Pension Reform 208
7.3.1 Reforming the Pay-as-you-go Pension System 209
7.3.2 Proposals for Partially Funded Pension Systems 220
7.4 Conclusion 233
8. Whither Generational Accounting? 235
A. Appendix: Proofs 241
A.1 Separability of Generational Accounts 241
A.2 Invariance of the Relative Fiscal Imbalance 242
A.3 Normal Reaction of Future Generational Accounts 243
B. Appendix: The Demographic Model 245
C. Appendix: German Public Sector Budgets 251
References 254
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