A GENERATIONAL ACCOUNT FOR DENMARK

This article shows how the method of generational accounting can be us ed to assess the cross-generational distribution of the lifetime tax b urden in Denmark. As a result of high public debt, changing demographi cs and a large public deficit in the base year (1992), we find that a continuation of current fiscal policy will pass fiscal burdens onto fu ture generations. In order to equalize the fiscal burdens on newborn a nd future generations, current fiscal policy would have to be tightene d by an amount corresponding to approximately 6 per cent of the revenu e from labour income taxation or a 20 per cent increase in the VAT rev enue.