Arbeitspapier

Fiscal sustainability and policy implications for the euro area

In this paper we examine the sustainability of euro area public finances against the backdrop of population ageing. We critically assess the widely used projections of the Working Group on Ageing Populations (AWG) of the EU's Economic Policy Committee and argue that ageing costs may be higher than projected in the AWG reference scenario. Taking into account adjusted headline estimates for ageing costs, largely based upon the sensitivity analysis carried out by the AWG, we consider alternative indicators to quantify sustainability gaps for euro area countries. With respect to the policy implications, we assess the appropriateness of different budgetary strategies to restore fiscal sustainability taking into account intergenerational equity. Our stylised analysis based upon the lifetime contribution to the government's primary balance of different generations suggests that an important degree of pre-funding of the ageing costs is necessary to avoid shifting the burden of adjustment in a disproportionate way to future generations. For many euro area countries this implies that the medium-term targets defined in the context of the revised stability and growth pact would ideally need to be revised upwards to significant surpluses.

Sprache
Englisch

Erschienen in
Series: Discussion Paper Series 1 ; No. 2009,04

Klassifikation
Wirtschaft
Social Security and Public Pensions
National Budget, Deficit, and Debt: General
Thema
population ageing
fiscal sustainability
generational accounting
medium-term objectives for fiscal policy
Alternde Bevölkerung
Öffentliche Ausgaben
Intergenerative Belastungsrechnung
Finanzpolitik
Nachhaltigkeit
EU-Staaten

Ereignis
Geistige Schöpfung
(wer)
Balassone, Fabrizio
Cunha, Jorge Correia da
Langenus, Geert
Manzke, Bernhard
Pavot, Jeanne
Prammer, Doris
Tommasino, Pietro
Ereignis
Veröffentlichung
(wer)
Deutsche Bundesbank
(wo)
Frankfurt a. M.
(wann)
2009

Handle
Letzte Aktualisierung
10.03.2025, 11:43 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Balassone, Fabrizio
  • Cunha, Jorge Correia da
  • Langenus, Geert
  • Manzke, Bernhard
  • Pavot, Jeanne
  • Prammer, Doris
  • Tommasino, Pietro
  • Deutsche Bundesbank

Entstanden

  • 2009

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