NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Generational Accounts, Aggregate Saving and Intergenerational Distribution

Willem H. Buiter

NBER Working Paper No. 5087
Issued in April 1995
NBER Program(s):   PE

Are generational accounts informative about the effect of the budget on the intergenerational distribution of resources and (when augmented with generation-specific propensities to consume out of life-time resources) on aggregate consumption and saving? The paper makes three points. First, the usefulness of generational accounts lives or dies with the strict life-cycle model of household consumption. Voluntary intergenerational gifts or liquidity constraints may therefore adversely affect or even destroy their informativeness. Second, even when the life-cycle model holds, generational accounts only measure the effect of the budget on the lifetime consumption of private goods and services. They ignore the intergenerational (re-)distribution associated with the government's provision of public goods and services. Third, generational accounting ignores the effect of the budget on before-tax and before-transfer quantities and prices, including before-tax and -transfer distribution of life-time resources across generations and intertemporal relative prices. That is, it does not handle incidence or general equilibrium repercussions very well. Although useful, generational accounts should therefore carry the label 'handle with great care.'

download in pdf format
   (657 K)

email paper

This paper is available as PDF (657 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w5087

Published: Economica, Vol.64 (1997), pp. 605-626. citation courtesy of

Users who downloaded this paper also downloaded these:
Cecchetti w5161 Inflation Indicators and Inflation Policy
Fischer w5064 Modern Approaches to Central Banking
Lumsdaine w5223 Factors Affecting Labor Supply Decisions and Retirement Income
Freeman w5435 Working for Nothing: The Supply of Volunteer Labor
Auerbach, Gokhale, and Kotlikoff w3589 Generational Accounts - A Meaningful Alternative to Deficit Accounting
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us