Population Prospects and the Determination of a Debt-Sharing Rule between Seceding Regions

30 Pages Posted: 7 Feb 2005

See all articles by Philippe Cattoir

Philippe Cattoir

European Commission - Directorate General for Taxation and Customs Union (DG TAXUD)

Frédéric Docquier

Université catholique de Louvain; CREAM, Centre for Research on Environmental Appraisal & Management, UK; IZA Institute of Labor Economics

Date Written: February 2004

Abstract

This paper investigates one of the most important financial issues arising from a secession or a country partitioning namely the sharing of the national public debt. Extending Dreze's distributive neutrality condition, we use the generational accounting technique and propose a dynamic debt-sharing criterion which takes into account both the true debt future generations inherit and their contributive capacity. The equivalence with Dreze's static rule is only obtained on the balanced growth path, and in the absence of initial regional debt. An application of our criterion to the Belgian case offers striking results.

Keywords: public debt, secession, generational accounting

JEL Classification: H60, H77

Suggested Citation

Cattoir, Philippe and Docquier, Frédéric, Population Prospects and the Determination of a Debt-Sharing Rule between Seceding Regions (February 2004). IZA Discussion Paper No. 1022. Available at SSRN: https://ssrn.com/abstract=508562

Philippe Cattoir

European Commission - Directorate General for Taxation and Customs Union (DG TAXUD) ( email )

B-1049 Brussels
Belgium

Frédéric Docquier (Contact Author)

Université catholique de Louvain ( email )

IRES
Place Montesquieu 3
Louvain-la-Neuve, 1348
Belgium

HOME PAGE: http://https://perso.uclouvain.be/frederic.docquier/

CREAM, Centre for Research on Environmental Appraisal & Management, UK

University of Newcastle
NE1 7RU Newcastle Upon Tyne
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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