Aging: Some Pleasant Fiscal Arithmetic |
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Authors: | David Hauner |
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Institution: | (1) Fiscal Affairs Department, International Monetary Fund, 700 19th Street, Washington, DC 20431, USA |
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Abstract: | 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 OECD countries over 2000–50. A general and
a specific conclusion arise from the results. Generally, long-term expenditure projections could benefit from revisiting common
assumptions on non-age-related expenditure growth. Specifically, realistic gradual adjustment in non-age-related expenditures
could go a long way towards maintaining fiscal sustainability under age-related spending pressures.
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Keywords: | Aging Fiscal sustainability OECD countries Public expenditure |
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