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Impact of Longevity Risks on the Korean Government: Proposing a New Mortality Forecasting Model

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  • Yongok Choi

    (Chung-Ang University)

Abstract

Korea’s life expectancy has experienced an unprecedented rapid increase that is significantly higher than that in other advanced economies. However, this phenomenon also signifies that the Korean government faces a considerable financial risk. This study identifies the factors that contribute to the overestimation of mortality and develops a new mortality forecasting model. In addition, the population projections of the new mortality forecasts are used to quantitatively measure the economic size of the longevity risks faced by the Korean government. Results suggest that if substantial longevity exposure is realized in the context of the Korean government, the longevity can solely increase the debt-to-GDP ratio by 33.8%p by 2060. Drawing on these findings, this study concludes with suggestions to mitigate such longevity risks.

Suggested Citation

  • Yongok Choi, 2020. "Impact of Longevity Risks on the Korean Government: Proposing a New Mortality Forecasting Model," Korean Economic Review, Korean Economic Association, vol. 36, pages 201-225.
    • Handle: RePEc:kea:keappr:ker-20200101-36-1-07
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Population Projection; Longevity Risk; Government Debt; Nonparametric Panel Regression;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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