Generational accounts for the Netherlands: An update

This paper extends the standard generational accounting methodology by inco rporating prospective changes in the economic environment, assigning the be nefits of government purchases to generations, distinguishing between publi c consumption and public investment, and transforming the generational acco unts into government budgets. It applies the methodology to the Netherlands . An expected increase in labor-force participation almost offsets the adve rse effect of aging on the sustainability of the Dutch public finances. Sin ce the rise in labor-force participation occurs before the bulk of the agin g, the government will have to run sizable fiscal surpluses in the next dec ades in order to create the budgetary room for higher age-related governmen t expenditures in later decades.