Quantifying Impact of Aging Population on Fiscal Space
June 1, 2012
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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.
Subject: Expenditure, Fiscal space, Labor, Labor taxes, Revenue administration
Keywords: Laffer curve, tax rate, WP
Pages:
25
Volume:
2012
DOI:
Issue:
164
Series:
Working Paper No. 2012/164
Stock No:
WPIEA2012164
ISBN:
9781475505122
ISSN:
1018-5941
