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Generational accounts are used to assess the distributional implications of fiscal policy for different cohorts. This is accomplished by estimating the present value of net tax payments (taxes paid less benefits received) over the lifetime of different generations under current tax and spending policies.

A generation is defined as including all males and females (separately accounted for, because of differing tax and benefits profiles) born in the same year.

The technique has heavy data requirements and the results depend on a large number of simplifying assumptions. It is generally regarded as a supplementary technique for analysis of sustainability and intergenerational distribution.

Source Publication:
IMF, 2007, Manual on Fiscal Transparency, IMF, Washington DC, Glossary.

Statistical Theme: Financial statistics

Created on Monday, July 23, 2007