Advanced Search
MyIDEAS: Login

Fiscal sustainability and policy implications for the euro area

Contents:

Author Info

  • Balassone, F.
  • Cunha, J.
  • Langenus, G.
  • Manzke, B.
  • Pavot, J.
  • Prammer, D.
  • Tommasino, P.

Abstract

In this paper we examine the sustainability of euro area public finances against the backdrop of population ageing. We critically assess the widely used projections of the Working Group on Ageing Populations (AWG) of the EU's Economic Policy Committee and argue that ageing costs may be higher than projected in the AWG reference scenario. Taking into account adjusted headline estimates for ageing costs, largely based upon the sensitivity analysis carried out by the AWG, we consider alternative indicators to quantify sustainability gaps for euro area countries. With respect to the policy implications, we assess the appropriateness of different budgetary strategies to restore fiscal sustainability taking into account intergenerational equity. Our stylised analysis based upon the lifetime contribution to the government's primary balance of different generations suggests that an important degree of pre-funding of the ageing costs is necessary to avoid shifting the burden of adjustment in a disproportionate way to future generations. For many euro area countries this implies that the medium-term targets defined in the context of the revised stability and growth pact would ideally need to be revised upwards to significant surpluses.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.banque-france.fr/uploads/tx_bdfdocumentstravail/ner225.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Banque de France in its series Working papers with number 225.

as in new window
Length: 72 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:bfr:banfra:225

Contact details of provider:
Postal: Banque de France 31 Rue Croix des Petits Champs LABOLOG - 49-1404 75049 PARIS
Web page: http://www.banque-france.fr/
More information through EDIRC

Related research

Keywords: Population Ageing ; Fiscal Sustainability ; Generational Accounting ; Medium-term Objectives for Fiscal Policy;

Other versions of this item:

Find related papers by JEL classification:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. M. Nautet & L. Van Meensel, 2011. "Economic impact of the public debt," Economic Review, National Bank of Belgium, issue II, pages 7-19, September.
  2. Abraham, Filip & Van Hove, Jan, 2010. "Can Belgian firms cope with the Chinese dragon and Asian tigers? The export performance of multi-product firms on foreign markets," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/330214, Katholieke Universiteit Leuven.
  3. Andrew B. BERNARD & Emily J. BLANCHARD & Ilke VAN BEVEREN & Hylke Y. VANDENBUSSCHE, 2012. "Carry-Along Trade," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2012020, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  4. Bernard, Andrew B & Van Beveren, Ilke & Vandenbussche, Hylke, 2010. "Multi-product exporters, carry-along trade and the margins of trade," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/382740, Katholieke Universiteit Leuven.
  5. Axel H. Börsch-Supan, 2012. "Entitlement Reforms in Europe: Policy Mixes in the Current Pension Reform Process," NBER Chapters, in: Fiscal Policy after the Financial Crisis National Bureau of Economic Research, Inc.
  6. International Monetary Fund, 2010. "Some Uncomfortable Arithmetic Regarding Europe's Public Finances," IMF Working Papers 10/177, International Monetary Fund.
  7. Axel H. Börsch-Supan, 2012. "Entitlement Reforms in Europe: Policy Mixes in the Current Pension Reform Process," NBER Working Papers 18009, National Bureau of Economic Research, Inc.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:bfr:banfra:225

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marie-Christine Petit-Djemad).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.