The Sustainability of Scottish Public Finances: a Generational Accounting Approach

Katerina Lisenkova, Miguel Sanchez-Martinez, James Sefton

Research output: Book/ReportCommissioned report

Abstract

This paper analyses the long-term sustainability and intergenerational equity of the Scottish public finances by employing a generational accounting model. This represents a novel approach to analysing these issues in the case of Scotland, while having the advantage of capturing policy-relevant intergenerational aspects. We find that, under the baseline scenario, assuming that Scotland has “full fiscal autonomy”, large intertemporal and intergenerational fiscal gaps open up. The three main reasons behind this result are: declining North Sea revenues, a budget deficit at the beginning of the simulation period and a widening gap over time primarily due to population ageing. The model suggests that both the intertemporal fiscal and generational imbalances can be addressed via a permanent increase in taxes equivalent to about 8.5 per cent of Scottish GDP, levied on both living and future generations.
Original languageEnglish
Place of PublicationLondon
Number of pages31
Volume456
Publication statusPublished - 7 Dec 2015

Publication series

NameNIESR Discussion Papers
Volume456

Keywords

  • sustainability
  • public finances
  • fiscal autonomy

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  • Cite this

    Lisenkova, K., Sanchez-Martinez, M., & Sefton, J. (2015). The Sustainability of Scottish Public Finances: a Generational Accounting Approach. (NIESR Discussion Papers; Vol. 456). London.