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Generational Accounts, Aggregate Saving and Intergenerational Distribution
Author(s) -
Buiter Willem H.
Publication year - 1997
Publication title -
economica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.532
H-Index - 65
eISSN - 1468-0335
pISSN - 0013-0427
DOI - 10.1111/1468-0335.00102
Subject(s) - economics , redistribution (election) , consumption (sociology) , externality , distribution (mathematics) , overlapping generations model , transfer payment , general equilibrium theory , public good , labour economics , microeconomics , public economics , welfare , market economy , sociology , mathematical analysis , social science , mathematics , politics , political science , law
Are generational accounts informative about the effect of the budget on the intergenerational distribution of resources and on aggregate saving? First, the usefulness of generational accounts lives or dies with the strict life‐cycle model of household consumption. Second, even if the life‐cycle model holds, generational accounts ignore the intergenerational redistribution associated with the government's provision of public goods and services and with intergenerational externalities. Third, generational accounting ignores the effect of the budget on tax and transfer bases and on before‐tax and ‐transfer quantities and prices. That is, it does not handle incidence or general equilibrium repercussions.