Is the deficit under control? A generational accounting perspective on fiscal policy and labour market trends in Spain

According to the 2001 Spanish budgetary figures, the government deficit is about to disappear. Within a generational accounting framework we analyse if current fiscal policy is also intertemporally balanced. Furthermore, we extend the standard methodology incorporating tax and transfer age profiles by employment status in order to analyse the intertemporal impact of several future employment developments. First, the effect of the reduction in unemployment is disentangled from the effect of fiscal policy reforms during the period 1996-2000. Second, we assess the fiscal effects of an expected future increase in female labour force participation. Finally, we evaluate the impact of a decline in unemployment to the natural rate of unemployment