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

  • Rossana Merola
  • Douglas Sutherland

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

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

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Handle: RePEc:pia:review:v:4:y:2013:i:3:n:2
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  1. Peter Claeys, 2007. "Sustainability of EU fiscal policies, a panel test," IREA Working Papers 200702, University of Barcelona, Research Institute of Applied Economics, revised Jan 2007.
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  6. Åsa Johansson & Yvan Guillemette & Fabrice Murtin & David Turner & Giuseppe Nicoletti & Christine de la Maisonneuve & Philip Bagnoli & Guillaume Bousquet & Francesca Spinelli, 2013. "Long-Term Growth Scenarios," OECD Economics Department Working Papers 1000, OECD Publishing.
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  16. Romain Bouis & Romain Duval, 2011. "Raising Potential Growth After the Crisis: A Quantitative Assessment of the Potential Gains from Various Structural Reforms in the OECD Area and Beyond," OECD Economics Department Working Papers 835, OECD Publishing.
  17. Ardagna, Silvia, 2004. "Fiscal Stabilizations: When Do They Work and Why," Scholarly Articles 2580047, Harvard University Department of Economics.
  18. 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.
  19. Rossana Merola & Douglas Sutherland, 2012. "Fiscal Consolidation: Part 3. Long-Run Projections and Fiscal Gap Calculations," OECD Economics Department Working Papers 934, OECD Publishing.
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