Macroeconomic Effects and Policy Challenges of Population Aging

Author/Editor:

Hamid Faruqee ; Natalia T. Tamirisa

Publication Date:

April 1, 2006

Electronic Access:

Free Full Text (PDF file size is 579 KB).Use the free Adobe Acrobat Reader to view this PDF file

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:

This paper simulates the macroeconomic effects of population aging in a dynamic overlapping generations model of a small open economy. The model is calibrated to data for the Czech Republic, where population aging is proceeding at a pace comparable to that in other advanced countries in Europe. Simulations show that population aging is likely to slow economic growth and improvements in living standards. Although reforms to raise labor force participation and productivity growth can mitigate these adverse effects, they are unlikely to eliminate the need for fiscal reforms. The budget will come under pressure from rising age-related expenditures, and consolidation will be needed to preserve debt sustainability.

Series:

Working Paper No. 06/95

Subject:

English

Publication Date:

April 1, 2006

ISBN/ISSN:

9781451863550/1018-5941

Stock No:

WPIEA2006095

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

23

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