The government lives off a credit card

A budget deficit is only a snap shot. It reveals next to nothing about government expenses over a longer period of time nor who will have to pay for these outlays. Rather than focussing on European budget norms and the 2012 or 2015 deadline, governments should take into account generational accounts.

Moving target

Generational accounts are based on all of the cash flows between the government and any population cohort born in a particular year.  The accounts consider the difference between what the members of such an age cohort will pay during their lifetime in taxes and what they will receive from the government as old-age transfers or education outlays. → Read More