The Finnish generational accounting revisited

A high real growth rate and employment volatility have turned out to be special features of the Finnish economy. Another special feature is that a large share of public wealth is invested in domestic and foreign financial markets. The consequences of these features for generational accounting are reviewed in this article. The intertemporal balance has improved remarkably according to generational accounting results of the year 2000 compared to the results of the year 1995. The improvement is due to favourable macroeconomic development, as well as ambitious fiscal policy. However, part of the improvement is based on the soared market values of assets, firm profits and capital income taxes. This paper raises the question of how to handle highly volatile variables in generational accountin