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

Author/Editor:

Peter S. Heller ; David Hauner

Publication Date:

May 1, 2005

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

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.

Series:

Working Paper No. 2005/091

Subject:

Aging Expenditure Fiscal policy Gross fixed investment Total expenditures

English

Publication Date:

May 1, 2005

ISBN/ISSN:

9781451861105/1018-5941

Stock No:

WPIEA2005091

Pages:

34

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