Measuring Fiscal Sustainability on the Municipal Level: A German Case Study
Research Center for Generational Contracts Paper Series No. 35
Posted: 11 Mar 2009
Date Written: March 11, 2009
Abstract
The consequences of ageing populations for federal and state fiscal policies are, due to the research efforts of the last two decades, well known. However, it is rather less well known how the municipal level is affected. Therefore, by using a modification of the sustainability definition formulated by Blanchard, Chouraqui, Hagemann, and Sartor (1990) and the concepts of Auerbachs, Kotlikoffs and Gokhales Generational Accounting (1991) we define a new framework focusing on capital stock, financial management and depreciation of municipal assets. This papers purpose is to deliver a concept which is able to provide sound indicators for long-term budgeting by local authorities. We apply this framework to three German cities with different typologies, Munich, Freiburg and Schwabisch Hall.
Keywords: Fiscal sustainability, demographic transition, municipalities
JEL Classification: H61, J10, R51
Suggested Citation: Suggested Citation