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The fiscal projection framework in long-term scenarios

Author

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  • Yvan Guillemette
  • David Turner

Abstract

The paper describes the fiscal framework used in long-term economic scenarios, with some emphasis on revisions made since the 2013 vintage of the long-term model. Long-term projections for public spending on pensions, health and long-term care are now separate from other primary expenditure and sourced from previous OECD work taking account of population ageing and other cost pressures. Other primary expenditure are assumed to remain constant in real terms on a per capita basis, rather than remaining stable as a share of GDP. This difference is important for long-term fiscal projections because government finances are sensitive to the employment rate, whereas expenditure is linked to the total population. A fiscal rule adjusts government revenue to ensure that public debt eventually stabilises as a share of GDP, making government revenue as a share of GDP the preferred indicator of future fiscal pressure.

Suggested Citation

  • Yvan Guillemette & David Turner, 2017. "The fiscal projection framework in long-term scenarios," OECD Economics Department Working Papers 1440, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:1440-en
    DOI: 10.1787/8eddfa18-en
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    Cited by:

    1. Michael Buchner, 2020. "Fiscal Policy in an Age of Secular Stagnation," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 62(3), pages 398-429, September.
    2. Yvan Guillemette & David Turner, 2018. "The Long View: Scenarios for the World Economy to 2060," OECD Economic Policy Papers 22, OECD Publishing.

    More about this item

    Keywords

    Fiscal projections; long-term model; long-term scenarios;
    All these keywords.

    JEL classification:

    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

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