Generational Accounts in the Czech Republic (in English)
Year: 2006 Volume: 56 Issue: 7 -8 Pages: 298-317
Abstract: The generational accounting approach used in this paper incorporates projected demographic development and the parameters of current Czech fiscal policy into an intertemporal government budget constraint. Compared with public-debt and deficit data, the economic indicators based on generational accounting are forward looking and yield additional information about fiscal policy. To assess the sustainability of Czech public budgets, the authors constructed the first set of generational accounts for the Czech Republic. They found that, for 2004, a representative agent obtained more benefits than paid taxes; that is, the generational account of the representative agent was negative. In addition, the total amount of government liabilities resulting from the current fiscal policy, projected to 2150, was estimated at about 300 percent of the national GDP in 2004. The authors conclude that Czech fiscal policy is not sustainable; current taxes and benefits should be modified in line with demographic projections in an effort to stabilize public budgets.
JEL classification: H61, E62
Keywords: fiscal sustainability; generational accounting
RePEc: http://ideas.repec.org/a/fau/fauart/v56y2006i7-8p298-317.html
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