Ageing and the Conflict of Interest Between Generations

Abstract

The ageing of the population imposes a considerable burden on long-term public finances in most industrialized countries. Generational accounting has been used across the world to assess the generational imbalance associated with current public policies. In this study, we incorporate Dutch generational accounts in an open economy overlapping generations model to assess the sustainability gap in current Dutch public finances. Our central estimate of the gap is 4.5% of gdp, but the paper also shows the sensitivity of this result. We explore a variety of policy reforms to reduce the sustainability gap, thereby presenting the impact on the intergenerational distribution of the net benefit from government. © 2011 The Author(s).