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Fiscal Consolidation and the Implications of Social Spending for Long-Term Fiscal Sustainability

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  • Rossana Merola
  • Douglas Sutherland

Abstract

This paper sheds light on the scale of fiscal consolidation that will be needed toensure long-term sustainability and on the potential benefits of institutional reforms inmitigating budget pressures of social spending. Based on alternative scenarios, resultssuggest that, in several OECD countries, the fiscal challenges are exacerbated in the longterm by spending pressures related to health and pensions. This paper shows howinstitutional reforms may support long-term fiscal sustainability and, at the same time,reduce adverse short-term effects of fiscal consolidation on growth.

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Bibliographic Info

Article provided by Università di Perugia in its journal Review of Economics and Institutions.

Volume (Year): 4 (2013)
Issue (Month): 3 ()
Pages:

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Handle: RePEc:pia:review:v:4:y:2013:i:3:n:2

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Keywords: fiscal consolidation; long-term public finance sustainability; public social expenditure; long-term projections; ageing populations;

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References

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  16. Rossana Merola & Douglas Sutherland, 2012. "Fiscal Consolidation: Part 3. Long-Run Projections and Fiscal Gap Calculations," OECD Economics Department Working Papers 934, OECD Publishing.
  17. Isabelle Joumard & Christophe André & Chantal Nicq, 2010. "Health Care Systems: Efficiency and Institutions," OECD Economics Department Working Papers 769, OECD Publishing.
  18. Meena Seshamani & Alastair Gray, 2004. "Ageing and health-care expenditure: the red herring argument revisited," Health Economics, John Wiley & Sons, Ltd., vol. 13(4), pages 303-314.
  19. Andreas Werblow & Stefan Felder & Peter Zweifel, 2007. "Population ageing and health care expenditure: a school of 'red herrings'?," Health Economics, John Wiley & Sons, Ltd., vol. 16(10), pages 1109-1126.
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