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Long-term fiscal sustainability in advanced economies

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  • Alan J. Auerbach

Abstract

This paper provides an evaluation of the long-term fiscal sustainability of advanced economies, based on current estimates of these economies’ current-policy fiscal trajectories. As will be quite evident, for many countries short-term fiscal measures, such as the debt-GDP ratio and the current budget deficit as a share of GDP, bear little relationship to the sustainability of policy. Some countries appear to be on relatively sustainable paths despite challenging short-run statistics, while for others benign short-term measures mask very large long-term problems. Of course, the future is uncertain while the present is known, so one may be tempted to discount negative long-term projections. But, based as they are on a demographic transition that is surely underway, one can discount particular estimates but not their general direction.

Suggested Citation

  • Alan J. Auerbach, 2015. "Long-term fiscal sustainability in advanced economies," Governance Working Papers 24835, East Asian Bureau of Economic Research.
    • Handle: RePEc:eab:govern:24835
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    References listed on IDEAS

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    1. Alan J. Auerbach, 2008. "Federal Budget Rules: The US Experience," NBER Working Papers 14288, National Bureau of Economic Research, Inc.
    2. Xavier Debrun & Tidiane Kinda, 2017. "Strengthening Post‐Crisis Fiscal Credibility: Fiscal Councils on the Rise – A New Dataset," Fiscal Studies, Institute for Fiscal Studies, vol. 38, pages 667-700, December.
    3. Alberto Alesina & Silvia Ardagna, 2013. "The Design of Fiscal Adjustments," Tax Policy and the Economy, University of Chicago Press, vol. 27(1), pages 19-68.
    4. Congressional Budget Office, 2014. "The 2014 Long-Term Budget Outlook," Reports 45471, Congressional Budget Office.
    5. Congressional Budget Office, 2014. "The 2014 Long-Term Budget Outlook," Reports 45471, Congressional Budget Office.
    6. Alan J Auerbach, 2011. "Long-term fiscal sustainability in major economies," BIS Working Papers 361, Bank for International Settlements.
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    Cited by:

    1. María del Carmen Ramos-Herrera & Simón Sosvilla-Rivero, 2020. "Fiscal Sustainability in Aging Societies: Evidence from Euro Area Countries," Sustainability, MDPI, vol. 12(24), pages 1-20, December.
    2. Lars P. Feld & Ekkehard A. Köhler & Julia Wolfinger, 2020. "Modeling fiscal sustainability in dynamic macro-panels with heterogeneous effects: evidence from German federal states," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(1), pages 215-239, February.
    3. Shiro Armstrong & Tatsuyoshi Okimoto, 2016. "Fiscal Sustainability in Japan," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 3(2), pages 235-243, May.

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    More about this item

    Keywords

    Fiscal Sustainability; public debt; Fiscal Gap;
    All these keywords.

    JEL classification:

    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

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