Generational accounting

Generational accounting are sustainability analysis of fiscal policy.

Methodology

The generational accounting was developed in the early 1990s in the United States for long-term analysis of fiscal policy and social policy. In this method, the reported overall economic budget items such as tax and pension payments, assigned to individual cohorts using age-specific profiles and then updated further with the aid of population projections into the future.

Sustainability gap

The resulting indicators, including the sustainability gap is to analyze the fiscal and social policies on sustainability and intergenerational distribution effects allow. The sustainability gap is made up of the already reported explicit public debt and the so-called implicit debt. The implicit debt gives the difference of all future benefits and contributions that have yet to be received or paid at the applicable law of all living today and all future generations. In other words, the sustainability gap shows how big the reserve fund must be to ensure that the current level of performance remains affordable for the future. These hidden liabilities include all services which owes its citizens and other professionals in the form of pension payments, health care or the state. Expenses for which the States ' legal obligations effectively respond without making corresponding reserves ".

Sustainability ranking

The table presents an international comparison of calculated with sustainability ranking government debt, namely public debt, including the covert government debt (base year 2010).

Given the high overall debt of most countries in the euro zone, the Foundation advocates a market economy for the future include also the covert government debt in the list of the stability criteria.

Source: European Commission, AMECO Database, Eurostat, own calculations of the Market Economy Foundation

Studies

The Research Center for Generational Contracts at the Albert- Ludwigs- University in Freiburg, Germany, under the leadership of Bernd Raffelhüschen, published on behalf of the Market Economy Foundation since 2006 regularly a generation balance.