Accrual Accounting and the Government's Intertemporal Budget Constraint

In its standard form, the intertemporal budget constraint requires the present value of a government's future primary cash surpluses to be at least equal to the value of its outstanding debt. In an effort to help link accrual accounting to fiscal analysis, this paper shows how the constraint can also be expressed in terms of the surpluses and balance sheets of the accrual-based accounts and fiscal statistics that are increasingly supplementing and sometimes replacing traditional cash-only accounting.