Fiscal Sustainability and Generational Burden Sharing in Denmark

Billede af publikationens forside
01-01-2002
DREAM Makroøkonomi Svend Erik Hougaard Jensen Ulrik Nødgaard Lars Haagen Pedersen

Based in generational accounts and a simple welfare calculus, this paper studies two alternative scenarios of sustainable fiscal policy in Denmark.

Artiklen er udgivet i Nordic Journal of Political Economy, 2002.

Abstract

Based in generational accounts and a simple welfare calculus, this paper studies two alternative scenarios of sustainable fiscal policy in Denmark. A strategy of tax smoothing is found to provide a fairly even intergenerational distribution of the financial burden associated with population ageing. While tax smoothing causes a relatively sharp increase in public debt along the transition path, a strategy of debt smoothing is shown to pass a larger part of the financial burden onto current generations but without changing the intergenerational distribution profile in any dramatic way. A comparison based on a social welfare function indicates a marginal superiotity of tax smoothing.