Smoothing the Fiscal Costs of Population Ageing in Australia: Effects on Intergenerational Equity and Social Welfare

16 Pages Posted: 5 Jun 2008

See all articles by Ross S. Guest

Ross S. Guest

Griffith University - School of Accounting and Finance - Gold Coast Campus

Abstract

This paper applies an overlapping generations model in order to evaluate the case for smoothing the fiscal costs associated with population ageing. The motivation is the establishment in Australia of the Future Fund which acts to smooth the tax burden over time. The conclusion is that tax smoothing of the order implied by the Future Fund yields a gain in social welfare in the order of 1.0 per cent in equivalent annual increases in GDP. All current generations of workers and retired workers are worse off, with middle-aged workers the worst affected, but future generations are better off and by larger magnitudes.

Suggested Citation

Guest, Ross, Smoothing the Fiscal Costs of Population Ageing in Australia: Effects on Intergenerational Equity and Social Welfare. Economic Record, Vol. 84, Issue 265, pp. 177-192, June 2008. Available at SSRN: https://ssrn.com/abstract=1140883 or http://dx.doi.org/10.1111/j.1475-4932.2008.00461.x

Ross Guest (Contact Author)

Griffith University - School of Accounting and Finance - Gold Coast Campus ( email )

PMB 50 Gold Coast Mail Centre
9726 Queensland
Australia

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