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The sustainability of public finances in the context of population ageing

Author

Listed:
  • W. Melyn

    (National Bank of Belgium)

  • L. Van Meensel

    (National Bank of Belgium)

  • S. Van Parys

    (National Bank of Belgium)

Abstract

In virtually every country in the world, populations are growing considerably older, a development known as ageing. That process is farthest advanced in the industrialised countries. In Belgium, too, the population is ageing and that will continue in the coming decades owing to expansion of the older population and a temporary decline in the population of working age. These demographic developments have a huge impact on society. For instance, economic growth slows down owing to the temporary decline in the population of working age. In addition, there is a strong upward pressure on public expenditure relating to pensions, health care and care of the elderly as a result of the steep rise in the number of pensioners. This demographic change therefore brings serious social and economic challenges, including in the sphere of public finances. The article describes these challenges and investigates how the government can respond, including via an appropriate fiscal policy, an economic policy that encourages growth, and reforms in the sphere of pensions and health care, in order to maintain sound public finances in the long term.

Suggested Citation

  • W. Melyn & L. Van Meensel & S. Van Parys, 2016. "The sustainability of public finances in the context of population ageing," Economic Review, National Bank of Belgium, issue iii, pages 87-103, December.
    • Handle: RePEc:nbb:ecrart:y:2016:m:december:i:iii:p:87-103
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    References listed on IDEAS

    as
    1. Balassone, F. & Cunha, J. & Langenus, G. & Manzke, B. & Pavot, J. & Prammer, D. & Tommasino, P., 2008. "Fiscal sustainability and policy implications for the euro area," Working papers 225, Banque de France.
    2. Casper van Ewijk & Nick Draper & Harry ter Rele & Ed Westerhout, 2006. "Ageing and the sustainability of Dutch public finances," CPB Special Publication 61.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    3. Dries Dury & Luc Van Meensel, 2007. "The sustainability of public finances in the context of population ageing," Economic Review, National Bank of Belgium, issue ii, pages 81-95, September.
    4. Mr. Benedict J. Clements & Mr. Kamil Dybczak & Vitor Gaspar & Mr. Sanjeev Gupta & Mauricio Soto, 2015. "The Fiscal Consequences of Shrinking Populations," IMF Staff Discussion Notes 2015/021, International Monetary Fund.
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    6. Mr. Julio Escolano, 2010. "A Practical Guide to Public Debt Dynamics, Fiscal Sustainability, and Cyclical Adjustment of Budgetary Aggregates," IMF Technical Notes and Manuals 2010/002, International Monetary Fund.
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    8. P. Bisciari & D. Dury & B. Eugène & L. Van Meensel, 2009. "Pension system reforms in the EU15 countries," Economic Review, National Bank of Belgium, issue iv, pages 21-45, December.
    9. Benedict J. Clements & Kamil Dybczak & Vitor Gaspar & Sanjeev Gupta & Mauricio Soto, 2015. "The Fiscal Consequences of Shrinking Populations," IMF Staff Discussion Notes 15/21, International Monetary Fund.
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    11. Geert Langenus, 2006. "Fiscal sustainability indicators and policy design in the face of ageing," Working Paper Research 102, National Bank of Belgium.
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    Cited by:

    1. Zapji Ymélé Aimé Philombe, 2022. "Interest Charges and the “Said†Ageing-related Expenditures: A Study of OECD Countries," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 15(3), pages 7-23, December.

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    More about this item

    Keywords

    Sustainability; demographics; ageing; health expenditure; public finances; budgetary surveillance;
    All these keywords.

    JEL classification:

    • H0 - Public Economics - - General
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • J1 - Labor and Demographic Economics - - Demographic Economics

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