La Ley de Estabilidad Presupuestaria en el largo plazo: efecto del ciclo demografico

The present economic situation and the financial perspectives in the long term have originated a discussion about the convenience of the Spanish law of financial stability (Ley de Estabilidad Presupuestaria). This paper uses the generational accounting methodology in order to evaluate the intertemporal sustainability of the Spanish fiscal policy extending the horizon beyond the business cycle, taking into consideration the effects of the demographic cycle. Our results show that, although the process of fiscal consolidation has greatly improved the financial situation of the government, substantial implicit liabilities are still being translated to future generations.