Long-term objectives for government debt ∗

This paper considers what fiscal targets the government should use to achieve long-term fiscal objectives. Among its findings are: 1. At least three important and possibly conflicting long-term objectives are associated with concerns about debt and deficits: intergenerational equity, economic performance, and fiscal sustainability. 2. If governments have incentives not to adhere to fiscal policy targets, then restrictions on fiscal policy actions may be desirable, even though such restrictions reduce the scope for policy flexibility. 3. A collection of forward-looking measures, including explicit and implicit government assets and liabilities, can provide far more information than short-term deficit targets alone.

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