Generational Accounting

Generational Accounting

A way to conduct accounting that primarily considers how current income and spending will impact long-term financial sustainability. The term is used most frequently in government accounting. For example, generational accounting may consider whether or not the state pension can pay all liabilities for at least 60 years.
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In particular, a small but sustained fall in the real interest rate from its present level of around 4 per cent would make it more difficult for Norway to keep public finances balanced in the long run, due to a decline in the return on the government's financial assets, including those accumulating in the Petroleum Fund.(15) Moreover, long-run projections for entitlement programmes are also highly dependent upon the cyclical position of the economy in the given base year on which the generational accounting model is calibrated (usually the latest year for which a budget is available).
Generational accounting is a method of long-term fiscal analysis and planning that I developed with Alan J.
Generational accounting (Kotlikoff, 1992) provides a mechanism to determine what weight is given now to future generations and what burden current government actions place on present and future generations.
Indeed, generational accounting estimates suggest that the tax burden would have to increase in the future unless a share of oil income is set aside (e.g.
Auerbach, Gokhale, and Kotlikoff revisit their concept of "generational accounting," a method of determining how the burden of fiscal policy falls on different generations.
The professor instead uses "generational accounting"--estimating what one generation will be forced to pay for another generation's promises.
Confusion Compounds: The Curious Case of Generational Accounting
(1994), 'Generational accounting: a meaningful way to evaluate fiscal policy', Journal of Economic Perspectives, 8(1), pp.
Recent generational accounting figures illuminate a highly disturbing future prospect for the EU youth.
The example will draw on the pioneering generational accounting of Laurence Kotlikoff (1992).
Specifically, it would institute what is known in economics as fiscal gap and generational accounting, which include future financial obligations that are currently off the books.
One of the most widely used methods, generally referred to as "generational accounting," consists of computing the net present value of taxes, net of transfers, for each age cohort.