This chapter summarizes the results of several individual country studies of the fiscal prospects for the countries of the European Community. A common methodology – generational accounting – was applied in each country study, resulting in a common set of measures about the burden current policy leaves for future generations and the importance of population aging in raising that burden. A synthesis such as this one does not provide the methodological details or breadth of sensitivity analyses that would allow a reader to evaluate the sensitivity of conclusions to assumptions used in the calculations. That is a substantial limitation when dealing with generational accounting, because the method is in general highly sensitive to assumptions. The benefit of synthesis is that it clearly distinguishes what is common to all the countries from what is unique to each.

The primary motivation for the use of generational accounting in this chapter is to measure the extent of long-run fiscal imbalance. Social insurance transfers resources from workers to retirees and therefore makes fiscal policy vulnerable to population aging. Generational accounting, as applied here, results in a measure of the increase in taxes needed to balance the government's long-run budget constraint. This measure of future tax burdens is adequate as an indicator of fiscal imbalance, but it should not be confused with two other types of intergenerational analyses.

One possible extension of generational accounting would be a study of the impact on different cohorts of well-specified changes in fiscal policy.