TY  - JOUR
AU  - Fehr, Hans
AU  - Kotlikoff, Laurence J
TI  - Generational Accounting in General Equilibrium
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5090
PY  - 1995
Y2  - April 1995
DO  - 10.3386/w5090
UR  - http://www.nber.org/papers/w5090
L1  - http://www.nber.org/papers/w5090.pdf
N1  - Author contact info:
Hans Fehr
University of Wuerzburg
Sanderring 2
97070 Wuerzburg, Germany
E-Mail: hans.fehr@uni-wuerzburg.de

Laurence J. Kotlikoff
Department of Economics
Boston University
270 Bay State Road
Boston, MA 02215
Tel: 617/353-4002
Fax: 617/353-4001
E-Mail: kotlikoff@gmail.com
M1  - published as Hans Fehr, Laurence J. Kotlikoff, Willi Leibfritz. "Generational Accounting in General Equilibrium," in Alan J. Auerbach, Laurence J. Kotlikoff and Willi Leibfritz, editors, "Generational Accounting around the World" University of Chicago Press (1999)

AB  - This paper shows how changes in generational accounts relate to the generational incidence of fiscal policy.  To illustrate the relationship, it uses the Auerbach-Kotlikoff Dynamic Life-Cycle Simulation Model to compare policy-induced changes in generational accounts with actual changes in generations' utilities.  The paper considers a wide range of policies in closed and small open economies as well as economies with and without capital adjustment costs. In general, changes in generational accounts appear to provide fairly good approximations to generations' actual changes in utilities.  The approximations are better for living generations. They are worse for policies that involve significant changes in the degree of tax progressivity and for economies with sizable capital- adjustment costs. Finally, generational accounting needs to be adjusted in the case of small open economies to take into account the fact that the incidence of corporate taxation is on labor.  The method of adjustment is simply to allocate changes in corporate tax revenues to generations in proportion to their changes in labor supply.
ER  -