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

60 Pages Posted: 23 Aug 2007

See all articles by Dennis P. J. Botman

Dennis P. J. Botman

International Monetary Fund (IMF) - Fiscal Affairs Department

Manmohan Kumar

International Monetary Fund (IMF) - Research Department

Date Written: August 2007

Abstract

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.

Keywords: Fiscal policy, Aging, Economic models, Working Paper, Labor markets, Direct taxation

Suggested Citation

Botman, Dennis P. J. and Kumar, Manmohan, Global Aging Pressures: Impact of Fiscal Adjustment, Policy Cooperation, and Structural Reforms (August 2007). IMF Working Paper No. 07/196, Available at SSRN: https://ssrn.com/abstract=1007944

Dennis P. J. Botman (Contact Author)

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

Manmohan Kumar

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-7771 (Phone)
202-589-7771 (Fax)

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