Aging: Some Pleasant Fiscal Arithmetic
Projections of age-related public expenditure growth have raised widespread concerns about fiscal sustainability. This paper examines how total expenditure would develop under four policy rules on public expenditure growth. Some simple arithmetic of expenditure, GDP, and population is reviewed and applied in simulations for 19 member countries of the Organization for Economic Cooperation and Development (OECD) over 2000-50. A general and a specific conclusion arise from the results in this paper: Generally, long-term expenditure projections could benefit from revisiting common assumptions on non-agerelated expenditure growth. Specifically, under realistic assumptions, the belt-tightening required to maintain fiscal sustainability under age-related spending pressures could be less painful than commonly thought.
|Date of creation:||01 Apr 2005|
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- Tanzi,Vito & Schuknecht,Ludger, 2000.
"Public Spending in the 20th Century,"
Cambridge University Press, number 9780521664103, 1.
- Peter S. Heller & David Hauner, 2005. "Characterizing the Expenditure Uncertainties of Industrial Countries in the 21st Century," IMF Working Papers 05/91, International Monetary Fund.
- Thai-Thanh Dang & Pablo Antolín & Howard Oxley, 2001. "Fiscal Implications of Ageing: Projections of Age-Related Spending," OECD Economics Department Working Papers 305, OECD Publishing.
- Martin MÃ¼hleisen & KornÃ©lia KrajnyÃ¡k & Stephan Danninger & David Hauner & Bennett Sutton, 2005. "How Do Canadian Budget Forecasts Compare with Those of Other Industrial Countries?," IMF Working Papers 05/66, International Monetary Fund.
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