Generational accounting implies that, holding the present value of government spending constant, budget deficits will not crowd out investment.

Question

Quizplus · Accepted Answer

Generational accounting focuses on the long-term fiscal sustainability and intergenerational distribution of fiscal policies. It does not imply that budget deficits won't crowd out investment; rather, it assesses how current fiscal policies affect future generations. Budget deficits can still lead to higher interest rates and crowd out private investment, regardless of the present value of government spending.

Generational Accounting Implies That, Holding the Present Value of Government