Global Aging Pressures: Impact of Fiscal Adjustment, Policy Cooperation, and Structural Reforms

August 1, 2007

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Manmohan S. Kumar, and Dennis P Botman. Global Aging Pressures: Impact of Fiscal Adjustment, Policy Cooperation, and Structural Reforms, (USA: International Monetary Fund, 2007) accessed November 21, 2024

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

Demographic pressures will materialize in many economies over the next few decades. We examine the macroeconomic impact of alternative fiscal adjustment and structural reform strategies to address these global aging pressures using the IMF's Global Fiscal Model (GFM). The results suggest substantial spillover effects of aging through international financial channels. To maintain sustainability, fiscal adjustment needs to be broad-based, while avoiding increases in direct taxes. There are substantial benefits from fiscal cooperation, while negative growth effects can be offset by complementary structural reforms in product and labor markets with the benefits accruing early and to all incomegroups.

Subject: Aging, Consumption, Fiscal consolidation, Fiscal policy, Labor supply

Keywords: Euro area, Government spending, Product market, Real GDP, Real interest rate, WP

Publication Details

Pages:

58
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2007/196
Stock No:

WPIEA2007196
ISBN:

9781451867602
ISSN:

1018-5941

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