Quantifying Impact of Aging Population on Fiscal Space

Working Paper No. 12/164

This paper quantitatively investigates how population aging trend affects fiscal space measured as unused revenue generating capacity by utilizing a standard neoclassical growth model. A calibration exercise for G-7 countries shows that France, Germany and Italy suffer greater revenue impact from a given reduction in hours worked due to their larger government expenditure. Corrective measures such as pension reform and flexible expenditure policy would be required in order to mitigate the impact of aging on fiscal space.
Publication date: June 2012
ISBN: 9781475505122
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Topics covered in this book

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Economics- Macroeconomics , Economics / General , International - Economics , Aging , Fiscal Space , Laffer Curve , Economic Models , Group Of Seven , Labor Supply , Tax Revenues , Public Economics

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