Generational balance

Generational balance sheets are sustainability analyzes of financial policy .

methodology

Generational accounting was developed in the USA in the early 1990s for the long-term analysis of fiscal and social policy . With this method, the reported macroeconomic budget items, such as pension and tax payments, are assigned to individual years with the help of age-specific profiles and then continued into the future with the help of population projections.

Sustainability gap

The resulting indicators, including the sustainability gap, make it possible to analyze fiscal and social policy for their sustainability and intergenerational distribution effects. The sustainability gap is made up of the explicit public debt, which has already been reported, and the so-called implicit debt. The implicit debt indicates the difference between all future benefits and contributions which, under applicable law, must still be received or paid by all present and future generations. In other words, the sustainability gap shows how large the accumulation of reserves has to be so that the current level of performance can also be financed in the future. This hidden debt includes all the benefits that the state owes its citizens and other professionals in the form of pension payments, care benefits or health insurance. Expenditures for which the states "enter into legally binding commitments without creating appropriate reserves".

Sustainability ranking

The table shows an international comparison of the national debt calculated using the sustainability ranking, namely national debt including the hidden national debt (base year 2010).

In view of the high total indebtedness of most countries in the Eurozone , the Market Economy Foundation advocates adding hidden public debt to the list of stability criteria in future.

The following important information is missing from this article or section:

these are not all euro countries

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Euro member state	Explicit public debt	Implicit public debt	Sustainability gap *	Need for consolidation
Italy	118.4	27.6	146.0	2.4
Germany	83.2	109.4	192.6	4.0
Finland	48.3	146.9	195.2	2.7
Austria	71.8	225.9	297.7	4.8
France	82.3	255.2	337.5	4.3
Portugal	93.3	265.5	358.8	6.5
Belgium	96.2	329.8	426.0	5.3
Netherlands	62.9	431.8	494.6	8.1
Spain	61.0	487.5	548.5	7.0
Greece	144.9	872.0	1,016.9	17.6
Luxembourg	19.1	1,096.5	1,115.6	12.0
Ireland	92.5	1,404.7	1,497.2	10.4

^(*)Sustainability gap = official (explicit) public debt + invisible (implicit) public debt (all figures in percent of GDP )

Source: EU Commission , AMECO Database , Eurostat , own calculations by the Market Economy Foundation

Studies

The research center for generation contracts at the Albert-Ludwigs-University in Freiburg, under the direction of Bernd Raffelhüschen , has been publishing a generational balance sheet on behalf of the Market Economy Foundation since 2006.

Web links

• Research center for generation contracts
• Generational Balance Website
• Spiegel Online (from July 11, 2008)

supporting documents

1. ↑ Market Economy Foundation: European sustainability ranking: Italy hui, Luxemburg pfui (PDF; 168 kB), press release of December 7, 2011.
2. ↑ Dorothea Siems: Debt Ranking: On this balance sheet Italy is in the best position in Europe. In: welt.de . December 7, 2011, accessed October 7, 2018 . 
3. ↑ http://www.tageblatt.lu/nachrichten/story/25909389
4. ↑ http://www.tageblatt.lu/nachrichten/luxemburg/story/10070961
5. ↑ Archive link ( Memento of the original dated February 3, 2012 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.  
6. ↑ http://www.tageblatt.lu/nachrichten/story/Umfassende-Rentenreform-notwendig-14524973
7. ↑ Archive link ( Memento of the original from January 10, 2012 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.  
8. ↑ Archive link ( Memento of the original from January 18, 2012 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.  
9. ↑ http://www.tageblatt.lu/wirtschaft/finanzen/story/30450278
10. ↑ "Greece is here". In: sueddeutsche.de. December 16, 2011, accessed August 4, 2018 .