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Accrual Accounting and the Government's Intertemporal Budget Constraint
Author(s) -
Irwin Timothy C.
Publication year - 2020
Publication title -
public budgeting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.694
H-Index - 30
eISSN - 1540-5850
pISSN - 0275-1100
DOI - 10.1111/pbaf.12270
Subject(s) - accrual , constraint (computer aided design) , economics , budget constraint , cash , debt , value (mathematics) , government (linguistics) , balance sheet , accounting , econometrics , macroeconomics , microeconomics , statistics , mathematics , linguistics , philosophy , geometry , earnings
In its standard form, the intertemporal budget constraint requires the present value of a government's future primary cash surpluses to be at least equal to the value of its outstanding debt. In an effort to help link accrual accounting to fiscal analysis, this paper shows how the constraint can also be expressed in terms of the surpluses and balance sheets of the accrual‐based accounts and fiscal statistics that are increasingly supplementing and sometimes replacing traditional cash‐only accounting.