Quantifying Impact of Aging Population on Fiscal Space

Author/Editor: Seok Gil Park
Publication Date: June 01, 2012
Electronic Access: Free Full text (PDF file size is 3,247KB).
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 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.
Series: Working Paper No. 12/164
Subject(s): Aging | Economic models | Group of seven | Labor supply | Tax revenues

Author's Keyword(s): Aging | fiscal space | Laffer curve
Publication Date: June 01, 2012
ISBN/ISSN: 9781475505122/1018-5941 Format: Paper
Stock No: WPIEA2012164 Pages: 25
US$18.00 (Academic Rate:
US$18.00 )
Please address any questions about this title to publications@imf.org