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Characterizing the Expenditure Uncertainties of Industrial Countries in the 21st Century

Author

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  • Peter S. Heller
  • David Hauner

Abstract

A number of uncertainties about long-term expenditure commitments in industrial countries are examined: (i) the assumptions underlying the projections, (ii) the potential to further reduce non-age-related expenditures, (iii) the implicitly assumed absence of "shocks," and (iv) the potential for raising revenue. This paper concludes that (i) there is scope, but within narrow limits, to reduce non-age-related expenditures; (ii) fiscal policy frameworks tend to understate risks; and (iii) prevailing tax rates leave little room for increasing taxation in the countries facing the strongest aging pressures. In sum, governments will have to adopt a much more ambitious fiscal policy stance to cope with aging populations.

Suggested Citation

  • 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.
  • Handle: RePEc:imf:imfwpa:05/91
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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=18223
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    References listed on IDEAS

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    1. Martin Mühleisen & Kornelia Krajnyak & Stephan Danninger & David Hauner & Bennett W Sutton, 2005. "How Do Canadian Budget Forecasts Compare with Those of Other Industrial Countries?," IMF Working Papers 05/66, International Monetary Fund.
    2. David Hauner, 2005. "Aging; Some Pleasant Fiscal Arithmetic," IMF Working Papers 05/71, International Monetary Fund.
    3. Tanzi,Vito & Schuknecht,Ludger, 2000. "Public Spending in the 20th Century," Cambridge Books, Cambridge University Press, number 9780521662918, May.
    4. repec:nsr:niesrd:250 is not listed on IDEAS
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    Cited by:

    1. repec:kap:iaecre:v:13:y:2007:i:3:p:347-364 is not listed on IDEAS
    2. Manmohan S. Kumar & David Hauner, 2006. "Fiscal Policy and Interest Rates; How Sustainable Is The “New Economy”?," IMF Working Papers 06/112, International Monetary Fund.

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