Indicators for Measuring Fiscal Sustainability: A Comparison of the OECD Method and Generational Accounting

Based on an empirical application for Germany, we compare two methods of measuring fiscal sustainability: the generational-accounting approach and the OECD method. In a first step, we show that the two methods can be transformed into one another. Hence, the indicators of generational accounting can be used for the OECD method and vice versa, thus enlarging the set of sustainability indicators for both methods. In a second step, we discuss these indicators with respect to their theoretical deficiencies, tangibility, and sensitivity. Finally, we come to the conclusion that a combination of indicators stemming from both approaches can give a more general and understandable description of fiscal sustainability and satisfy a strictly defined condition of sustainability at the same time.