Looking to the Future: The Comprehensive Balance Sheet

So far, we have argued that without a complete conventional balance sheet – one that accounts for and properly values all assets and liabilities – a rational allocation of fiscal resources at a point in time and over time is impossible. In this chapter we argue for the use of the comprehensive balance sheet or intertemporal budget constraint of the state - the consolidated general government and central bank - to address the sustainability of the public finances. It is based on the conventional balance sheet, and adds as an implicit asset the present value of future primary revenues, including seigniorage, and as an implicit liability the present value of future primary expenditures.