Ageing and Fiscal Sustainability in Europe
Fiscal Sustainability Conference, p. 255, 2000
32 Pages Posted: 17 Jul 2012
Date Written: January 20, 2000
Abstract
Werner Roeger analyses the economic and budgetary implications of current demographic projections for Europe and the US over the next 50 years, within the framework of a multi-country dynamic general equilibrium model. Roeger evaluates the labour supply implications of demographic changes and, drawing on previous public expenditure projections, evaluates the effects of ageing on GDP and consumption growth, on the capital to output ratio and on interest rates. The analysis indicates that the effects of population ageing on per capita income and consumption will be sizeable from 2020 onwards. The model indicates that forward looking households can cushion the decline in real consumption by increasing the rate of savings over the next 20 years. This lowers interest rates and increases the capital stock. When dependency ratios peak, households run down their capital stock. Roeger focuses on the implications of financing additional pension expenditure in a PAYG system and on the effects of distortionary taxes on unemployment rates. The simulation results show that while it will be possible to finance the additional expenditure even using distortionary taxation, the economic and budgetary costs will be large.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
The Part-Time Pay Penalty for Women in Britain
By Alan Manning and Barbara Petrongolo
-
The Part-Time Pay Penalty for Women in Britain
By Alan Manning and Barbara Petrongolo
-
Why Do Part-Time Workers Earn Less? The Role of Worker and Job Skills
-
Moving Down: Women's Part - Time Work and Occupational Change in Britain 1991-2001
By Sara Connolly and Mary Gregory
-
Back-to-Front Down-Under? Part-Time/Full-Time Wage Differentials in Australia
By Alison L. Booth and Margi Wood
-
Job Satisfaction and Family Happiness: The Part-Time Work Puzzle
By Alison L. Booth and Jan C. Van Ours