Ensuring Fiscal Sustainability in G-7 Countries
AbstractRising longevity, falling fertility rates, and the retirement of the baby boom generation will substantially raise age-related government spending in most advanced and many emerging market countries. This paper assesses the evolution of fiscal sustainability for each of the G-7 countries using two standard primary gap indicators. The estimated fiscal adjustment required to ensure long-run fiscal sustainability is substantial for all G-7 countries. In particular, ensuring fiscal sustainability would require an average improvement in the primary balance of about 4 percentage points of GDP. While the overall adjustment required to achieve long-run fiscal sustainability in G-7 countries is large, there are significant growth benefits to putting public finances on a sustainable footing in the near term versus delayed adjustment.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 07/187.
Date of creation: 01 Jul 2007
Date of revision:
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This paper has been announced in the following NEP Reports:
- NEP-AGE-2007-09-16 (Economics of Ageing)
- NEP-ALL-2007-09-16 (All new papers)
- NEP-EEC-2007-09-16 (European Economics)
- NEP-MAC-2007-09-16 (Macroeconomics)
- NEP-PBE-2007-09-16 (Public Economics)
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