Abstract:
This thesis used a combination of qualitative policy analysis and quantitative modelling to forecast intergenerational welfare effects of current fiscal policies for New Zealand and find a useful indicator of current and future sustainability. Through studying policy implications of the Global Financial Crisis, key fiscal policies were identified, namely public debt and superannuation schemes. Two types of overlapping generations models were used: one in the traditional style of Diamond (1965), and another using the maximum sustainable debt model by Rankin and Roffia (1999). Evidence is found in favour of increased intergenerational welfare via a transition to a SAYGO pension scheme. Furthermore, evidence is found in favour of an actual-to-maximum ratio of debt being a superior indicator of solvency than the debt-to-GDP ratio, although the debt-to-GDP ratio in conjunction with the real rate of interest and real growth rate of GDP is shown to be a good indicator of current and future welfare.