IDEAS home Printed from https://ideas.repec.org/p/rif/wpaper/92.html
   My bibliography  Save this paper

Assessing Components of Uncertainty in Demographic Forecasts with an Application to Fiscal Sustainability

Author

Listed:
  • Alho, Juha
  • Lassila, Jukka

Abstract

When the future evolution of demographic processes is described in a stochastic setting, the challenge is to communicate the meaning of forecast uncertainty in an understandable way, to decision makers and public at large. For the purpose of risk communication, a formal setting is developed, in which the roles of the demographic processes on point forecasts and predictive distributions can be elucidated. The communication problem becomes central in fiscal decision making, when eventual forecast errors have differential implications on the value of the policy options being considered. Tax rate that is required to maintain financial sustainability, until a given target year, is used for illustration.

Suggested Citation

  • Alho, Juha & Lassila, Jukka, 2022. "Assessing Components of Uncertainty in Demographic Forecasts with an Application to Fiscal Sustainability," ETLA Working Papers 92, The Research Institute of the Finnish Economy.
    • Handle: RePEc:rif:wpaper:92
    as

    Download full text from publisher

    File URL: https://www.etla.fi/wp-content/uploads/ETLA-Working-Papers-92.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Risto Vaittinen & Reijo Vanne, 2011. "National Transfer Accounts for Finland," Chapters, in: Ronald Lee & Andrew Mason (ed.), Population Aging and the Generational Economy, chapter 14, Edward Elgar Publishing.
    2. Ronald Lee & Andrew Mason (ed.), 2011. "Population Aging and the Generational Economy," Books, Edward Elgar Publishing, number 13816.
    3. Andrew Mason & Ronald Lee, 2011. "Population aging and the generational economy: key findings," Chapters, in: Ronald Lee & Andrew Mason (ed.), Population Aging and the Generational Economy, chapter 1, Edward Elgar Publishing.
    4. Jukka Lassila & Tarmo Valkonen, 2018. "Longevity, Working Lives, And Public Finances," Contemporary Economic Policy, Western Economic Association International, vol. 36(3), pages 467-482, July.
    5. Lassila, Jukka & Valkonen, Tarmo & Alho, Juha M., 2014. "Demographic forecasts and fiscal policy rules," International Journal of Forecasting, Elsevier, vol. 30(4), pages 1098-1109.
    6. Alho, Juha M., 2014. "Forecasting demographic forecasts," International Journal of Forecasting, Elsevier, vol. 30(4), pages 1128-1135.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lassila, Jukka, 2018. "Aggregate Risks, Intergenerational Risk-Sharing and Fiscal Sustainability in the Finnish Earnings-Related Pension System," ETLA Working Papers 57, The Research Institute of the Finnish Economy.
    2. Barik, Debasis & Desai, Sonalde & Vanneman, Reeve, 2018. "Economic Status and Adult Mortality in India: Is the Relationship Sensitive to Choice of Indicators?," World Development, Elsevier, vol. 103(C), pages 176-187.
    3. Kolk, Martin, 2019. "Demographic Theory and Population Ethics – Relationships between Population Size and Population Growth," SocArXiv 62wxd, Center for Open Science.
    4. Mikkel Christoffer Barslund & Marten von Werder, 2016. "Measuring dependency ratios using National Transfer Accounts," Vienna Yearbook of Population Research, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna, vol. 14(1), pages 155-186.
    5. Lee, R., 2016. "Macroeconomics, Aging, and Growth," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 59-118, Elsevier.
    6. Gretchen Donehower, 2018. "Measuring the Gendered Economy," Working Papers cwwwp4, University of Cape Town, Development Policy Research Unit.
    7. Laurence J. Kotlikoff & Andrey V. ZUBAREV & Andrey POLBIN, 2021. "Will the Paris accord accelerate climate change [Ускоряет Ли Парижское Соглашение Изменение Климата?]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 8-37, February.
    8. Mejía-Guevara, Iván, 2015. "Economic inequality and intergenerational transfers: Evidence from Mexico," The Journal of the Economics of Ageing, Elsevier, vol. 5(C), pages 23-32.
    9. Sang-Hyop Lee & Jungsuk Kim & Donghyun Park, 2017. "Demographic Change and Fiscal Sustainability in Asia," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 134(1), pages 287-322, October.
    10. De Neve, Jan-Walter & Fink, Günther, 2018. "Children’s education and parental old age survival – Quasi-experimental evidence on the intergenerational effects of human capital investment," Journal of Health Economics, Elsevier, vol. 58(C), pages 76-89.
    11. Ahmed, S. Amer & Vargas Da Cruz,Marcio Jose & Quillin,Bryce Ramsey & Schellekens,Philip, 2016. "Demographic change and development : a global typology," Policy Research Working Paper Series 7893, The World Bank.
    12. Emilio Zagheni & Brittney Wagner, 2015. "The impact of demographic change on intergenerational transfers via bequests," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 33(18), pages 525-534.
    13. Chomik, Rafal & McDonald, Peter & Piggott, John, 2016. "Population ageing in Asia and the Pacific: Dependency metrics for policy," The Journal of the Economics of Ageing, Elsevier, vol. 8(C), pages 5-18.
    14. Hippolyte d’ALBIS & Dalal MOOSA, 2015. "Generational Economics and the National Transfer Accounts," JODE - Journal of Demographic Economics, Cambridge University Press, vol. 81(4), pages 409-441, December.
    15. Thomas Flochel & Yuki Ikeda & Harry Moroz & Nithin Umapathi, 2014. "Macroeconomic Implications of Aging in East Asia Pacific," World Bank Publications - Reports 23026, The World Bank Group.
    16. Istenič, Tanja & Vargha, Lili & Sambt, Jože, 2019. "Is there a connection between welfare regimes and inter-age reallocation systems?," The Journal of the Economics of Ageing, Elsevier, vol. 14(C).
    17. Sang-Hyop Lee & Andrew Mason & Donghyun Park, 2012. "Overview: why does population aging matter so much for Asia? Population aging, economic growth, and economic security in Asia," Chapters, in: Donghyun Park & Sang-Hyop Lee & Andrew Mason (ed.), Aging, Economic Growth, and Old-Age Security in Asia, chapter 1, pages 1-31, Edward Elgar Publishing.
    18. Mahesh Karra & David Canning & Joshua Wilde, 2015. "A Simulation Model of the Effect of Fertility Reduction on Economic Growth in Africa," Working Papers 0315, University of South Florida, Department of Economics.
    19. Elisenda Rentería & Rosario Scandurra & Guadalupe Souto & Concepció Patxot, 2016. "Intergenerational money and time transfers by gender in Spain: Who are the actual dependents?," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 34(24), pages 689-704.
    20. Frank T. Denton & Byron G. Spencer, 2015. "A Simulation Analysis of the Longer-Term Effects of Immigration on Per Capita Income in an Aging Population," Department of Economics Working Papers 2015-14, McMaster University.

    More about this item

    Keywords

    Aging; Demography; Predictive distribution; Risk communication; Stationary equivalent population;
    All these keywords.

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rif:wpaper:92. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kaija Hyvönen-Rajecki (email available below). General contact details of provider: https://edirc.repec.org/data/etlaafi.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.