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Ensuring Fiscal Sustainability in G-7 Countries
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Author/Editor: |
Hauner, David | Leigh, Daniel | Skaarup, Michael |
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July 1, 2007 |
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Electronic Access: |
Free Full Text (PDF file size is 314KB)
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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.
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Summary: Rising longevity, falling fertility rates, and the retirement of the baby boom generation will substantially raise age-related government spending in most advanced and many emerging market countries. This paper assesses the evolution of fiscal sustainability for each of the G-7 countries using two standard primary gap indicators. The estimated fiscal adjustment required to ensure long-run fiscal sustainability is substantial for all G-7 countries. In particular, ensuring fiscal sustainability would require an average improvement in the primary balance of about 4 percentage points of GDP. While the overall adjustment required to achieve long-run fiscal sustainability in G-7 countries is large, there are significant growth benefits to putting public finances on a sustainable footing in the near term versus delayed adjustment.
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Series: |
Working Paper No. 07/187 |
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Subject(s): |
Fiscal policy | Group of seven | Aging | Government expenditures | Economic models |
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Author's keyword(s): |
Fiscal sustainability
| aging
| genenral equilibrium models
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Published: |
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July 1, 2007 |
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ISBN/ISSN: |
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1934-7073 |
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Format: |
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Paper |
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Stock No: |
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WPIEA2007187 |
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Pages: |
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29 |
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Price: |
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US$18.00 (Academic Rate: US$18.00)
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