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Measures of Fiscal Dependency

Author

Listed:
  • Joe Ruggeri

    (University of New Brunswick, Fredericton, Canada)

  • Yang Zou

    (University of New Brunswick, Fredericton, Canada)

Abstract

There is a concern in many countries that projected increases in the population age sixty-five and older will impose unsustainable burdens on future generations. These fiscal pressures are often expressed with reference to population dependency ratios. The authors argue that concerns about fiscal sustainability may be legitimate, but the use of population dependency ratios as indicators of fiscal pressures is not. They develop an approach to this issue that includes (1) a comprehensive coverage of the public sector, (2) a new methodology for capturing the fiscal effects of population aging, and (3) the integration of demographic, economic, and fiscal variables. This approach is applied to the Canadian fiscal system for the period from 2002-2003 to 2025- 2026. The results indicate that the current fiscal system is sustainable over the long run and does not incorporate intergenerational inequities.

Suggested Citation

  • Joe Ruggeri & Yang Zou, 2006. "Measures of Fiscal Dependency," Public Finance Review, , vol. 34(4), pages 381-403, July.
    • Handle: RePEc:sae:pubfin:v:34:y:2006:i:4:p:381-403
    DOI: 10.1177/1091142105285576
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    References listed on IDEAS

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    1. Frank T. Denton & Christine H. Feaver & Byron G. Spencer, 2002. "Alternative Pasts, Possible Futures: A "What If" Study of the Effects of Fertility on the Canadian Population and Labour Force," Canadian Public Policy, University of Toronto Press, vol. 28(3), pages 443-459, September.
    2. Jagadeesh Gokhale & Bernd Raffelhuschen, 1999. "Population aging and fiscal policy in Europe and the United States," Economic Review, Federal Reserve Bank of Cleveland, issue Q IV, pages 10-20.
    3. Daniel R. Mullins & Sally Wallace, 1996. "Changing Demographics and State Fiscal Outlook: the Case of Sales Taxes," Public Finance Review, , vol. 24(2), pages 237-262, April.
    4. Herbert C. Northcott, 1994. "Public Perceptions of the Population Aging "Crisis"," Canadian Public Policy, University of Toronto Press, vol. 20(1), pages 66-77, March.
    5. Clark, Robert L & Kreps, Juanita & Spengler, Joseph J, 1978. "Economics of Aging: A Survey," Journal of Economic Literature, American Economic Association, vol. 16(3), pages 919-962, September.
    6. Suzanne Kennedy & Chris Matier, "undated". "Comparing the Long-term Fiscal Outlook for Canada and the United States Using Fiscal Gaps," Working Papers-Department of Finance Canada 2003-04, Department of Finance Canada.
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