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Characterizing the Expenditure Uncertainties of Industrial Countries in the 21st Century

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  • Mr. Peter S. Heller
  • Mr. David Hauner

Abstract

A number of uncertainties about long-term expenditure commitments in industrial countries are examined: (i) the assumptions underlying the projections, (ii) the potential to further reduce non-age-related expenditures, (iii) the implicitly assumed absence of "shocks," and (iv) the potential for raising revenue. This paper concludes that (i) there is scope, but within narrow limits, to reduce non-age-related expenditures; (ii) fiscal policy frameworks tend to understate risks; and (iii) prevailing tax rates leave little room for increasing taxation in the countries facing the strongest aging pressures. In sum, governments will have to adopt a much more ambitious fiscal policy stance to cope with aging populations.

Suggested Citation

  • Mr. Peter S. Heller & Mr. David Hauner, 2005. "Characterizing the Expenditure Uncertainties of Industrial Countries in the 21st Century," IMF Working Papers 2005/091, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2005/091
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    References listed on IDEAS

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    1. Mr. Martin Mühleisen & Ms. Kornelia Krajnyak & Mr. Stephan Danninger & Mr. David Hauner & Mr. Bennett W Sutton, 2005. "How Do Canadian Budget Forecasts Compare with Those of Other Industrial Countries?," IMF Working Papers 2005/066, International Monetary Fund.
    2. Tanzi,Vito & Schuknecht,Ludger, 2000. "Public Spending in the 20th Century," Cambridge Books, Cambridge University Press, number 9780521662918, October.
    3. Mr. David Hauner, 2005. "Aging: Some Pleasant Fiscal Arithmetic," IMF Working Papers 2005/071, International Monetary Fund.
    4. Dr Martin Weale, 2005. "Fiscal implications of demographic uncertainty for the UK," National Institute of Economic and Social Research (NIESR) Discussion Papers 250, National Institute of Economic and Social Research.
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    1. repec:kap:iaecre:v:13:y:2007:i:3:p:347-364 is not listed on IDEAS
    2. Mr. Manmohan S. Kumar & Mr. David Hauner, 2006. "Fiscal Policy and Interest Rates: How Sustainable Is The “New Economy”?," IMF Working Papers 2006/112, International Monetary Fund.
    3. David Hauner, 2007. "Aging: Some Pleasant Fiscal Arithmetic," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 13(3), pages 347-364, August.
    4. Zvi Hercowitz & Michel Strawczynski, 2005. "Government Spending Adjustment: The OECD Since the 1990s," Bank of Israel Working Papers 2005.09, Bank of Israel.

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    Keywords

    WP; government; country; outlay;
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