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Debt-sharing and Secession: A Generational Accounting Approach

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  • Philippe Cattoir
  • Frédéric Docquier

Abstract

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 Drèze'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 Drèze'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. © 2004 Regional Studies Association.

Suggested Citation

  • Philippe Cattoir & Frédéric Docquier, 2004. "Debt-sharing and Secession: A Generational Accounting Approach," ULB Institutional Repository 2013/229562, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:ulb:ulbeco:2013/229562
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    1. Martin Feldstein, 1995. "Would Privatizing Social Security Raise Economic Welfare?," NBER Working Papers 5281, National Bureau of Economic Research, Inc.
    2. DREZE , Jacques H., 1993. "Regions of Europe : A Feasible Status, to be discussed," LIDAM Discussion Papers CORE 1993037, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. Alan J. Auerbach & Jagadeesh Gokhale & Laurence J. Kotlikoff, 1991. "Generational Accounts: A Meaningful Alternative to Deficit Accounting," NBER Chapters, in: Tax Policy and the Economy, Volume 5, pages 55-110, National Bureau of Economic Research, Inc.
    4. DREZE, Jacques, 1993. "Regions of Europe," LIDAM Reprints CORE 1068, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    5. Alan J. Auerbach & Jagadeesh Gokhale & Laurence J. Kotlikoff, 1994. "Generational Accounting: A Meaningful Way to Evaluate Fiscal Policy," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 73-94, Winter.
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    Cited by:

    1. Grégoire Rota Graziosi, 2004. "La fragmentation politique, une revue de la littérature," Revue Française d'Économie, Programme National Persée, vol. 18(4), pages 193-223.
    2. André Decoster & Xavier Flawinne & Pieter Vanleenhove, 2014. "Generational accounts for Belgium: fiscal sustainability at a glance," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 41(4), pages 663-686, November.

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    More about this item

    JEL classification:

    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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