generational accounting a meaningful way to evaluate fiscal policy this paper illustrates the technique of generational accounting a new way to evaluate fiscal policy that overcomes the inherent ambiguities of traditional deficit accounting the authors illustrate why there is no correct measure of the deficit and how generational accounting estimating the fiscal burdens current policy places on different generations provides a clearer picture of the intergenerational and macroeconomic effects of fiscal policy than any measure of the deficit their calculations suggest that despite recent changes u s fiscal policy is unsustainable in that it will ultimately require future generations to bear a much higher burden than those currently alive

willingness of rural communities to adopt biogas systems in pakistan critical factors and policy implications abstract biogas is a methane rich gas that is produced by the anaerobic fermentation of organic material such as animal dung pakistan has the sixth largest livestock based economy in the world and thus demonstrates great potential for biogas production the government has already started the biogas support program bsp in a few selected areas of the country with that in mind this study was designed to determine a household s predicted willingness to adopt a biogas system in khyber pakhtunkhwa kp province the study is based on primary data collected from four districts peshawar nowshera charsadda and mardan data was collected from 200 livestock farming households selected through an equal allocation technique probit analysis was used to identify those factors influencing the willingness of a household to adopt a biogas system the results of the probit model reveal that the education level of the respondents total daily electric shortfall the effect of electric shortfall on childrens education and female drudgery and respondents awareness regarding the pros and cons of using biogas were statistically significant factors on the basis of p

increasing the capital income tax may lead to faster growth this paper shows that under rather mild conditions higher capital income taxes lead to faster growth in an overlapping generations economy with endogenous growth government expenditures are financed with labor income taxes as well as capital income taxes since capital income accrues to the old taxing it reliefs the tax burden on the young and leaves them with more income out of which to save we argue that savings are sufficiently interest inelastic so that higher savings and therefore higher growth result the basic argument is not seriously challenged by a grandfather clause for initial capital or by the old receiving some labor income as well the reasoning is similar to feldstein 1978 auerbach 1979 and in particular jones and manuelli 1992 but in contrast to the conventional wisdom about the effect of capital income taxation as say in lucas 1990

finite lifetimes and the effects of budget deficits on national saving abstract even though realistic deficit policies shift sizable tax burdens to future generations the assumption of an infinite horizon is a good approximation for analyzing a deficit s short run saving effect on individuals who are neither liquidity constrained nor myopic recent u s experience casts significant doubt on these assumptions however and appears difficult to reconcile with the ricardian equivalence proposition that the timing of taxes does not affect national saving recent deficits have coincided with reduced national saving and a substantial increase in the share of gnp devoted to consumption

unfunded liabilities and uncertain fiscal financing we develop a rational expectations framework to study the consequences of alternative means to resolve the unfunded liabilities problem the projected exponential growth in federal social security medicare and medicaid spending with no known plan for financing the transfers resolution requires specifying a probability distribution for how and when monetary and fiscal policies will change as the economy evolves through the 21st century beliefs based on that distribution determine the existence of and the nature of equilibrium we consider policies that in expectation combine reaching a fiscal limit some distorting taxation modest inflation and some reneging on the government s promised transfers in the equilibrium inflation targeting monetary policy and debt targeting tax policy cannot anchor expectations on those target variables expectational effects are always present but need not have large impacts on inflation and interest rates in the short and medium runs in the economy s stationary distribution the capital stock may grow or shrink and substantial probability falls on little or no reneging

inter vivos transfers and intergenerational exchange the surge of interest in intergenerational transfers in the past decade has sparked a debate over the motivation for them are transfers given out of altruism or part of an exchange while each motive is probably at work to some extent we know little about whether one motive predominates the question is relevant for issues concerning public income redistribution and inequality in the family but despite its importance empirical evidence about motives is scarce because of limited data we investigate a new data set the national survey of families and households which remedies many of the shortcomings of other data sets containing private transfer information we find that empirical patterns for inter vivos transfers i e transfers between living persons are more consistent with exchange than altruism

an economic analysis of midwestern us criteria pollutant emissions trends from 1970 to 2000 abstract from 1970 to 2000 u s economic output doubled but emissions of four criteria pollutants from economic activity co no x voc and so 2 decreased by 20 understanding what factors have contributed to this pollution reduction in the u s as a whole as well as in various regions within the country has important policy implications a recently developed regional environmental econometric input output model for the midwestern states of the u s has been used to examine the causes of pollution reduction in this regional economy over a thirty year period simulations conducted with this model suggest that for the rate of growth experienced over the period technological improvement has dominated economic structural change in the reduction of pollutant emissions on average technological improvement has accounted for approximately 80 of emissions reduction while economic structural change explains the remaining 20 of the decrease our analysis suggests that while much remains to be done in reducing emissions in both developed and developing countries policies that are informed by an understanding of the role of structural change and which promote the adoption of more recently developed technologies may contribute substantially to sustainable development

the dynamics of electricity demand in pakistan a panel cointegration analysis abstract this paper examines the dynamics of electricity demand in pakistan at the aggregate and sectoral levels over the period 1978 2012 panel cointegration test and fully modified ordinary least squares method is employed to determine the long run relationship between electricity consumption real income real price of electricity and domestic price of non energy products the results reveal that electricity demand is more responsive to changes in income than changes in prices at the aggregate and disaggregate levels short run and long run income elasticities are positive and statistically significant supporting the conservation hypothesis it appears from the results that long run price elasticities are negative and significant at the aggregate level and for the agriculture commercial residential sectors and public utilities the short run price elasticities are significant but low in magnitude which implies that changes in electricity price exert minimal effect on the electricity consumption in pakistan the domestic price of non energy products is positive and significant for aggregate sample in the short run the domestic price of non energy products exert significant negative positive impact on electricity demand in the agriculture industrial sectors the results thus provide important information to the agents operating in the electricity market regarding the income and pricing policies and helps in planning the future strategy of electricity demand management

is the dollar high because of large budget deficits abstract it is widely believed that the u s dollar has been high in recent years because of large u s budget deficits using three statistical techniques this paper shows that the belief has no empirical support ricardian equivalence may explain the lack of a positive association between the budget deficit and the dollar s exchange rate

ageing and the welfare state securing sustainability over the next four decades increasing old age dependency ratios will exert an enormous upward pressure on welfare spending in most developed countries as this is mainly due to existing unfunded public pension schemes many countries have embarked on far reaching reforms in this area strengthening actuarial fairness modifying indexation rules adding elements of pre funding and last but not least attempting to extend the period of economic activity efforts to contain costs may also be relevant with regard to public expenditure on health and long term care but thus far no country has started to really deal with these issues still some countries have made substantial progress in securing the long term sustainability of their welfare systems what remains to be considered is re constructing the system of intergenerational transactions as a potential way of removing disincentives to raise children and invest in their human capital in the long run

overcoming electricity crisis in pakistan a review of sustainable electricity options abstract pakistan is facing severe electricity supply shortages causing forced power outages over the last decade ranging from 8 to 12 h a day in urban areas and up to 18 h in rural areas the major causes behind the increasing gap between supply and demand are mainly increases in electricity demand on one hand and depleting energy resources and financial constraints on the other in this context the government has been taking various measures including a partial restructuring of the electricity sector under guidelines from international financing institutes at present the country is therefore not only facing a serious challenge of meeting the electricity demand but is also facing the challenge of ensuring energy security in the context of globally important climate change issues the role of policy makers at this stage is crucial for not only assessing and reviewing the current strategies to minimize the electricity supply and demand gap but also the need to develop future strategies ensuring affordable electricity with efficient generation transmission and distribution towards sustainable development in the country this paper provides a review of the current energy situation discussion on policy drivers and plans analysis of the issues of the power sector as well as recommendations for narrowing the electricity supply demand gap towards sustainable electricity for the country

generational accounting and intergenerational welfare we investigate the intergenerational welfare implications of generational accounting when it is used as the basis for intertemporal fiscal policy decisions in particular we consider an economy with a paygo social security system out of steady state due to a permanent fall in fertility in a highly stylized cge overlapping generations model we illustrate that policy recommendations based on a standard application of generational accounting may not be compatible with intertemporal welfare maximization our model provides an example where such policies are either time inconsistent or welfare decreasing

structural innovation and efficiency effects of environmental regulation evidence from china s carbon emissions trading pilot conventional wisdom argues that environmental regulation can trigger both structural adjustments and enhanced innovation we test this conjecture by using a difference in differences approach to analyze the impacts of china s carbon emission trading cet pilot policy on energy consumption we find that compliance with the cet regulation has triggered statistically significant adjustments in energy structure industrial structure and technological innovation adjustments in industrial structure also contribute to enhanced total factor energy efficiency whereas increased technological innovation has mixed effects on energy efficiency we show that in the short run government led innovation does not immediately contribute to improvement in energy efficiency whereas enterprise led innovation has a negative impact it indicates that cet regulation can affect energy efficiency through industrial structure and technological innovation overall our results provide new evidence for the strong version of the porter hypothesis our results also provide strong scientific support for china s recent transition towards market based carbon mitigation strategies

should generational accounts replace public budgets and deficits the author assesses the concept of generational accounts and the specific accounts constructed by alan auerbach jagadeesh gokhale and laurence kotlikoff 1991 although these accounts support the assertion of present orientation in fiscal policy they rest on numerous assumptions based on judgments that are open to question these involve the treatment of the public budget constraint the benefits from public exhaustive expenditures economic and population projections the discount rate and fiscal incidence alternative and equally reasonable assumptions could yield radically different conclusions the author concludes that the auerbach gokhale and kotlikoff accounts should not replace the annual public budget as they argue

on the irrelevance of government debt when taxes are distortionary abstract we consider a government that can only raise funds by levying distortionary taxes we allow the government to collect taxes in a given period that are based on incomes earned in previous periods we show that once we do so given any debt path the government can adjust its tax policy so as to attain that debt path without affecting equilibrium allocations or prices

a review of energy and power planning and policies of pakistan pakistan is facing multiple challenges for harnessing the indigenous energy resources and devise rational energy policies the country is believed to have abundant energy resources however coping substantial electricity supply gap of over 5000 mw this paper analyses country s energy and power planning studies conducted since its independence in 1947 and policies announced so far it is found that water resources management attained more emphasis in early decades of post independence rather than energy concerns the first energy and power planning study was conducted in late 1960s and since then various studies were undertaken to supplement five yearly medium term development plans of government however it is pertinent to mention that formal energy and power policies were only announced from 1994 onwards owing to growing electricity demand and progressing industrialization beside this the focus of these policies is not only varied but were conceived without undertaking integrated energy planning using energy modeling tools e g markal times leap enpep balance message and energyplan it is despite the fact that these tools are successfully applied globally for devising the energy policies and address the complexities of energy system by assisting effective policy formulation this study recommends that integrated energy planning using energy modeling tools will be helpful to develop sustainable energy policies in pakistan to eradicate electricity crises

comparing structural decomposition analysis and index to analyze and understand historical changes in economic environmental employment or other socio economic indicators it is useful to assess the driving forces or determinants that underlie these changes two techniques for decomposing indicator changes at the sector level are structural decomposition analysis sda and index decomposition analysis ida for example sda and ida have been used to analyze changes in indicators such as energy use co2 emissions labor demand and value added the changes in these variables are decomposed into determinants such as technological demand and structural effects sda uses information from input output tables while ida uses aggregate data at the sector level the two methods have developed quite independently which has resulted in each method being characterized by specific unique techniques and approaches this paper has three aims first the similarities and differences between the two approaches are summarized second the possibility of transferring specific techniques and indices is explored finally a numerical example is used to illustrate differences between the two approaches

an institutional framework for the development of sustainable and competitive power market in pakistan abstract pakistan is continuously striving for sustainable and competitive power market under the comprehensive power sector reform program pakistan shifted its power market from monopoly model to single buyer model by unbundling water and power development authority wapda and establishing national transmission and dispatch company ntdc current severe power situation in the country is triggering the government of pakistan gop to accelerate the implementation of intended reform program and to readily undertake next planned transformation i e from single buyer model to wholesale market model this research endeavors the future dynamics of power market after the structural spin off by pre assessment of upcoming wholesale power market market power of both public and private electricity generators has been computed using 8 largest firm concentration ratio herfindahl hirschman index hhi and residual supply index rsi the findings suggest that future power market will function with non existence of market power except in the periods of peak electricity demand and maximum hydro generation furthermore insufficient installed capacities and underutilization of public thermal units may enable some players to exercise market power for sustainable and competitive power market an empirically supported framework has been proposed based on the analysis the framework proposes utilization of huge available renewable energy potential for future which will protect the whole infrastructure from market power it recommends respective roles and responsibilities for the smooth transition among market models the framework will be supportive in terms of successful and smooth transition from single buyer model to wholesale market model and potential of wind solar biogas to be properly explored and utilized to reduce energy gap

budget deficits rhetoric and reality w v t hatever the real or imagined ills of the economy the news media most politicians and a fair proportion of the economics profession are quick to point to the culprit the budget deficit no matter that few appear to know or care precisely what deficit they are talking about or how it is measured no matter that few bother to explain in terms of a relevant model just how government deficits may be expected to impact the economy no matter that few offer any empirical data to sustain their judgments so budget deficits cause inflation budget deficits raise interest rates budget deficits bring on the trade deficits budget deficits crowd out investment budget deficits are an irresponsible mortgage on the future and budget deficits caused the october 1987 stock market crash and now threaten further financial cataclysms is there truth in any of these assertions or does it all depend budget deficits do matter and their effects contrary to barro s ricardian equivalence theorem can be substantial as most economists have recognized for at least half a century budget deficits can however be too small as well as too large to know which you have to measure them right and you have to analyze their role in the world in which we live pure walrasian and rational expectation market clearing models may prove more useful for academic advancement than for promotion of economic health i need not repeat many of the objections to the equivalence theorem raised by bernheim and gramlich and addressed by barro in this symposium however there is

aggregate wealth in canada this paper describes a comprehensive measure of aggregate private sector wealth in canada that includes both human and nonhuman wealth wealth and its components are measured at a quarterly frequency from 1963 to 1994 human wealth is computed as the expected present value of aggregate labor income net of government expenditures using a finite state markov approximation to an estimated bivariate var for the real interest rate and net income growth nonhuman wealth is constructed by consolidating the assets and liabilities of the various sectors of the economy to the extent possible assets and liabilities are measured at market value

defining the government s debt and deficit although the budget deficit and the public debt feature prominently in political debate and economic research there is no agreement about how they should be measured they can b e defined for different sets of public institutions including the nested sets corresponding to central government general government and the public sector and for any definition of government there are many measures of the debt and deficit including those generated by four kinds of accounts cash financial full accrual and comprehensive which can be derived from four nested sets of assets and liabilities each debt and deficit measure says something about public finances but none tells the whol e story each is also vulnerable to manipulation and is likely to be manipulated if it is subject to a binding fiscal rule or target narrow definitions of government encourage the shifting of spending to entities outside the defined perimeter of governme nt narrow definitions of debt and deficit encourage operations involving off balance sheets assets and liabilities while broad measures are susceptible to the mismeasurement of on balance sheet assets and liabilities reviewing the literature on these is sues the paper concludes that governments should publish several measures of the debt and deficit in a form that clearly reveals their interrelationships

interest rates and expected future budget deficits in the united states several recent empirical studies have found no evidence of a positive association between interest rates and current and past budget deficits one possible explanation for this finding is that interest rates are related much more to the expectation of future budget deficits than to current and past budget deficits in this paper i investigate whether this explanation is valid finding no evidence that it is section ii briefly formulates and discusses the hypothesis under consideration stating some of its implications section iii presents the results of regressing the commercial paper rate moody s aaa bond rate and the ex post real commercial paper rate on current and past government spending budget deficits and real money supplies the regressions have been fitted to the entire sample of monthly data spanning the period between june 1908 and march 1984 and to 11

global estimates of energy consumption and greenhouse gas emissions abstract the present study examines the long run relationship between energy consumption and greenhouse gas emission for different groups of countries comprising lower middle income upper middle income and heavily indebted countries east asia and pacific east europe and central asia latin america and caribbean middle east and north africa south asia sub saharan africa and for aggregate data of the world the data has been analyzed by using various econometric techniques specifically the johnson cointegration modified version of granger causality and variance decomposition analysis from the period of 1975 to 2011 the results confirm that there is a long run relationship between greenhouse gas emissions i e agricultural methane emission agricultural nitrous oxide emission and carbon dioxide emission and energy consumption the results of granger causality indicate that energy consumption granger causes greenhouse gas emission but not vice versa the important finding is that energy consumption granger causes gdp per unit energy use which confirms the energy led growth hypothesis in the world however the vice versa relationship does not hold the results imply that a policy to cut energy consumption tends to diminish greenhouse gas emission though affecting gdp of countries negatively

what can we learn from generational accounts for the united kingdom this paper considers the relevance of a set of generational accounts in informing policy debate in the uk with regard to transparency generational accounts can under sensible assumptions provide a useful summary statistic to supplement our analysis of government policy interpreting differences in the accounts across groups as measures of the incidence or redistributiveness of existing or proposed policies is more problematic with respect to uk pension reform within cohort differences raise important issues finally we argue that past pension reforms have been characterised by inaccurate forecasts as opposed to a lack of understanding of the generational incidence of proposed policy

fiscal policy and educational attainment in the united states a generational accounting perspective in this paper we investigate the consequences of the rise in educational attainment on us generational accounts we build on the 1995 existing accounts and disaggregate them per schooling level contrary to medium and high skill newborns we show that low skill newborns are characterized by negative generational accounts compared to the results obtained with the traditional methodology our baseline forecast is more optimistic nevertheless the rise in educational attainment is not strong enough to restore the generational balance balancing the budget requires increasing taxes by 1 2 or reducing transfers by 2 7 our results are robust to the main assumptions

generational accounts for the united states an update abstract although relatively new generational accounting has been used in 26 countries to evaluate the generational stance of national fiscal policies generational accounting calculates the size of prospective net tax burdens and lifetime net tax rates that different generations face under current fiscal policy information that standard budget presentations do not reveal this method can also be used to calculate the policy changes required for achieving a generationally balanced and therefore sustainable fiscal policy that implies equal lifetime net tax rates on today s newborns and future generations those born after 1998 calculations made two years ago suggested a sizable generational imbalance in u s fiscal policy implying lifetime net tax rates on future generations that are 72 percent higher than those on newborns in 1995 since then unexpectedly strong growth in both gross domestic product gdp and the tax share of gdp has boosted revenues and slow growth in defense spending has reduced federal purchases as a share of gdp to a postwar low those developments augur federal budget surpluses for at least a decade and portend a corresponding reduction in the generational imbalance

generational accounting around the globe generational accounting is a relatively new method of long term fiscal planning and analysis this paper presents a selection of the latest generational accounting results for 22 countries this abstract was borrowed from another version of this item

assessment of present conventional and non conventional energy scenario of pakistan abstract it has become the universal fact that the energy is one of the key factors for the smooth and faster upgradation of the socio economic activities in any country in pakistan s history of over 60 years the country presently is facing possibly the worst energy crisis that has geared back the socio economic development below the level of critical sustainability and tolerance of the people every walk of life and industrial activities have declined due to long electricity shut down every day since last few years in view to access the current status of available energy resources the present research study has been carried out to review and assess the demography of the country versus energy sectors energy supplies consumptions status of fossil fuel resources oil gas coal conventional non conventional electricity generation and past present future energy demand supply during 2001 2011 the results of this assessment indicate that conventional resources in pakistan are and will not be enough to meet the ever growing energy demand and consequently highlight the importance of the renewable energy sources that are apparently encouraging in the country but have not been developed to any satisfaction priority is imperative to be given for the adequate development of renewable energy sectors in addition to the present energy mix

national energy scenario of pakistan current status future alternatives and institutional infrastructure an overview abstract in this article the current energy consumption of pakistan is presented and the issue of security of electrical energy supply is discussed the power sector has been looked from variety of aspects such as demand and supply gap diminishing energy sources energy security and increasing energy costs furthermore the status of energy and potential of renewable sources of energy has been discussed as sustainable alternative in addition the roles of different sectors in the promotion and development of renewable energy technologies have been discussed the renewable energy future prospects are encouraging in pakistan with a total renewable energy potential of about 167 7 gw which is more than enough to meet the total electricity demand of the country this vast potential of renewable sources of energy could be utilized to overcome the energy shortage which has not been utilized properly due to lack of policies and infrastructure the diversification of existing energy resources and exploration of new sources is an important aspect to be considered in order to have a sustainable power development and its implementation in the country

perspectives from the president s commission on social security reform recently we were asked to serve on the president s commission to strengthen social security csss along with 14 other members drawn equally from both major political parties the commission s charge was to provide recommendations to modernize the social security system restore its fiscal soundness and develop a workable system of personal retirement accounts this paper explains how the commission arrived at some of its recommendations and the role that economics played in contributing to these recommendations we describe the key institutional constraints confronting efforts to reform social security and how these constraints influenced commission decisions we also illustrate how economics research influenced the commission s analysis of how to structure personal accounts ways to enhance traditional social security program finances and means of measuring the extent of financial progress achieved through reform

structure and environmental impact of global energy consumption abstract this paper presents information on global energy consumption by fuel type liquid fuels coal natural gas renewables and nuclear and sectors buildings industrial transportation and electricity and environmental impact of global energy consumption sox nox and co2 emissions there is a strong relationship between energy consumption and economic growth the global financial crisis has affected the global economic growth violently the governments have recently adopted some effective measures to fight against the global financial crisis the structure of energy consumption and the conditions of sox nox and co2 emissions affect the global changes acid rain and greenhouse effect today considerable effort is being devoted to reduce co2 emissions because of the kyoto protocol on climate change this publication presents multidisciplinary perspectives on the interrelated topics of energy consumption energy security and energy policy additionally the present study examines the relationship between energy consumption and greenhouse gas emission

debt sharing and secession a generational accounting approach cattoir p and docquier f 2004 debt sharing and secession a generational accounting approach reg studies38 293 303 this paper investigates one of the most important financial issues arising from a secession or a country partitioning namely the sharing of the national public debt extending dreze s distributive neutrality condition we use the generational accounting technique and propose a dynamic debt sharing criterion which takes into account both the true debt future generations inherit and their contributive capacity the equivalence with dreze s static rule is only obtained on the balanced growth path and in the absence of initial regional debt an application of our criterion to the belgian case offers striking results cattoir p et docquier f 2004 secession et partage de la dette publique une approche par la comptabilite generationnelle reg studies38 293 303 ce papier analyse l une des principales questions budgetaire posee en cas de secession ou de partage d un etat en plusieurs

new evidence on deficits and interest rates it is generally assumed on theoretical grounds that increases in government borrowing cause interest rates to rise 1 but empirical support for this proposition has been weak at best several recent papers have uncovered no strong relationship between deficits and short terrn interest rates however the research reported here indicates that although the relationship between deficits and short terrn interest rates may be tenuous there is strong evidence that larger deficits are associated with higher long terrn interest rates much of the debate about whether there is a strong relationship between federal borrowing and interest rates concerns the crowding out question this controversy centers on the direct and indirect eilffects of government fiscal actions on private spending these effects have been well documented in the theoretical literature e g buiter 1977 carlson and spencer 1975 blinder and solow 1973 many of the crowding out effects studied in this literature depend on the connection between government borrowing and high interest rates friedman 1978 meyer 1975 silber 1970 this is called short run indirect crowding out and may occur when increases in government spending and borrowing cause interest rates to rise which then may cause private spending to be reduced buiter 1977 pp 310 13

do budget deficits raise nominal interest rates evidence from six countries abstract it is widely believed that budget deficits raise nominal interest rates this paper shows that the belief has no empirical support for six countries ricardian equivalence may explain the lack of a positive association between budget deficits and nominal interest rates

generational accounting a new approach for understanding the effects of fiscal policy on saving working pa er 9107 generational accounting a new approach for understanding the effects of fiscal policy on saving by alan j auerbach jagadeesh gokhale and laurence j kotlikoff alan j auerbach is a professor of economics at the university of pennsylvania and an associate of the national bureau of economic research jagadeesh gokhale is an economist at the federal reserve bank of cleveland and laurence j kotlikoff is a professor of economics at boston university and an asso ciate of the national bureau of economic research working papers of the federal reserve bank of cleveland are preliminary materials circu lated to stimulate discussion and critical comment the views stated herein are those of the authors and not necessarily those of the federal reserve bank of cleveland or of the board of governors of the federal reserve sys tem may 1991

defining the government s debt and deficit defining the government s debt and deficit although the budget deficit and the public debt feature prominently in political debate and economic research there is no agreement about how they should be measured they can be defined for different sets of public institutions including the nested sets corresponding to central government general government and the public sector and for any definition of government there are many measures of the debt and deficit including those generated by four kinds of accounts cash financial full accrual and comprehensive which can be derived from four nested sets of assets and liabilities each debt and deficit measure says something about public finances but none tells the whole story each is also vulnerable to manipulation and is likely to be manipulated if it is subject to a binding fiscal rule or target narrow definitions of government encourage the shifting of spending to entities outside the defined perimeter of government narrow definitions of debt and deficit encourage operations involving off balance sheets assets and liabilities while broad measures are susceptible to the mismeasurement of on balance sheet assets and liabilities reviewing the literature on these issues the paper concludes that governments should publish several measures of the debt and deficit in a form that clearly reveals their interrelationships

a test of steady state government debt neutrality a test of steady state government debt neutrality this paper investigates whether in the steady state the real interest rate is an increasing function of both the government debt and government spending using data from the period between january 1981 and march 1986 the paper finds no evidence of such a relationship these data afford an especially powerful test because the ratio of federal debt to trend output which had fallen from 93 to 33 percent between january 1948 and december 1980 reversed course after the enactment of the economic recovery tax act reaching 47 percent in march 1986 i introduction in conventional macroeconomic analysis government debt is not neutral because households view it as contributing to their net wealth as a result the larger the government debt is the wealthier households feel and the more they consume more consumption in turn spells less investment over time and thus a lower steady state capital stock as a result output is ultimately lower and the real interest rate higher in principle however households need not view government debt as net wealth 1 if households accurately foresee the future taxes that will service the government debt if they face perfect capital markets if taxes do not distort their decisions and if they internalize future generations then they treat the future taxes servicing the government debt as an exact offset consequently government debt is neutral since it does not make households feel wealthier and hence affects nothing 2 nevertheless because most macroeconomists doubt that households accurately foresee future servicing taxes have access to perfect capital markets and internalize future generations they do not model government debt as neutral like perfect competition however government debt neutrality may be a good approximation in many applications even if the assumptions underlying it are unrealistic therefore empirical analysis rather than introspection should determine how one models government debt this paper provides such an empirical analysis the empirical analysis focuses on the steady state relationship between government debt and the real interest rate 3 in the steady state a larger government debt leads to a smaller capital stock and hence a higher marginal product of capital if households view government debt as net wealth consequently the real interest rate is also higher if instead government debt is neutral nothing should happen to the real interest rate u s data from the period between january 1981 and march 1986 have been used here to investigate whether a larger government debt leads to a higher real interest rate in the steady state and hence whether government debt is neutral these data afford an especially powerful test because the ratio of federal debt to trend output which had fallen from 94 to 33 percent between january 1948 and december 1980 reversed course after the enactment of the economic recovery tax act reaching 47 percent by march 1986 moreover this upward trend is likely to continue well beyond 1986 such an enormous increase in federal debt should have raised by steady state real interest rate appreciably if households view government debt as net wealth to any important extent in the absence of evidence that the steady state real interest rate did rise government debt is judged to be neutral in the steady state section ii formulates the model which is estimated in sections iii and iv section v summarizes the paper and then briefly reviews an extensive literature consistent with government debt neutrality ii formulation of the econometric model the appendix demonstrates that if households view government debt as net wealth the real interest rate should be an increasing function of both the government debt and government spending in the steady state see also evans 1988 for this analysis

structural decomposition analysis of physical flows in the economy many environmental problems can be attributedto the extraction and emissions of physicalsubstances increasing our understanding of theeconomic and technological driving forcesbehind these physical flows can contribute tosolving the environmental problems related tothem the input output framework is a usefulsetting in which to integrate detailedinformation about economic structure andphysical flows in this article a specificmethod in input output analysis is reviewed namely structural decomposition analysis sda it is based on comparative static analysis which decomposes historical changes of a policyvariable into determinant effects sda has beenapplied for example to analyze the demand andtechnological driving forces of energy use co2 emissions and various other pollutantsand resources this article examines thetheoretical aspects of structuraldecomposition in particular those concerningphysical flows and environmental issues furthermore the article includes an extensivesurvey of empirical studies

is the extended family altruistically linked direct tests using micro data this paper uses panel study of income dynamics data on parents and their adult children to test the standard altruism model this model predicts that within the extended family the distribution of consumption is independent of the distribution of resources the authors findings strongly reject this prediction copyright 1992 by american economic association