Fiscal Sustainability and Demographics - Should We Save or Work More?
AbstractApproaching demographic shifts are raising concerns about fiscal sustainability in most OECD countries. A widespread view based on the tax-smoothing idea is that a prior consolidation of public finances is required to cope with the predicted trend deterioration in the primary budget balance. Both positive aspects in assessing the order of magnitude of sustainability problems and normative aspects of formulating policy strategies are addressed. It is argued that the smoothing argument cannot unconditionally be applied to the demographic problem. It is important to distinguish between increases in the dependency ratio driven by changes in fertility and longevity. For the former the smoothing argument may be appropriate, but not for the latter. In the case of longevity, a trade-off between consolidation and increasing retirement ages becomes relevant, and there are strong arguments why the latter should be pursued by e.g. linking retirement ages to longevity.
Download InfoIf 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.
Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7044.
Date of creation: Nov 2008
Date of revision:
Contact details of provider:
Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
Find related papers by JEL classification:
- E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
- H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
- J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
This paper has been announced in the following NEP Reports:
- NEP-AGE-2009-02-28 (Economics of Ageing)
- NEP-ALL-2009-02-28 (All new papers)
- NEP-CBA-2009-02-28 (Central Banking)
- NEP-MAC-2009-02-28 (Macroeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- de la Croix, David & Mahieu, Géraldine & Rillaers, Alexandra, 2000.
"How should retirement policy adjust to the baby bust ?,"
Discussion Papers (IRES - Institut de Recherches Economiques et Sociales)
2001003, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- David De La Croix & Géraldine Mahieu & Alexandra Rillaers, 2004. "How Should the Allocation of Resources Adjust to the Baby Bust?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 6(4), pages 607-636, October.
- Alexandra Rillaers & David de la Croix & Geraldine Mahieu, 2003. "How Should The Allocation Of Resources Adjust To The Baby Bust?," Working Papers. Serie AD 2003-27, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Flodén, Martin, 2002.
"Public Saving and Policy Coordination in Ageing Economies,"
CEPR Discussion Papers
3567, C.E.P.R. Discussion Papers.
- Martin FlodÈn, 2003. "Public Saving and Policy Coordination in Aging Economies," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(3), pages 379-400, 09.
- Martin Floden, 2002. "Matlab code for Public saving and policy coordination in aging economies," QM&RBC Codes 56, Quantitative Macroeconomics & Real Business Cycles.
- Daniel Leigh & David Hauner & Michael Skaarup, 2007. "Ensuring Fiscal Sustainability in G-7 Countries," IMF Working Papers 07/187, International Monetary Fund.
- Boris Cournède & Frédéric Gonand, 2006. "Restoring Fiscal Sustainability in the Euro Area: Raise Taxes or Curb Spending?," OECD Economics Department Working Papers 520, OECD Publishing.
- Galasso, Vincenzo & Profeta, Paola, 2002. "The political economy of social security: a survey," European Journal of Political Economy, Elsevier, vol. 18(1), pages 1-29, March.
- Padilla, Emilio, 2002. "Intergenerational equity and sustainability," Ecological Economics, Elsevier, vol. 41(1), pages 69-83, April.
- Andersen, Torben M., 2008. "Increasing longevity and social security reforms--A legislative procedure approach," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 633-646, April.
- Oecd, 2006. "Projecting OECD Health and Long-Term Care Expenditures: What Are the Main Drivers?," OECD Economics Department Working Papers 477, OECD Publishing.
- Barro, Robert J., 1979.
"On the Determination of the Public Debt,"
3451400, Harvard University Department of Economics.
- Mulligan Casey B & Sala-i-Martin Xavier, 2004. "Political and Economic Forces Sustaining Social Security," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-56, May.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.