This Selected Issues paper explores the economic consequences of aging and its impact on long-term fiscal sustainability for Cyprus. The study analyzes the potential macroeconomic impact of different approaches to deal with the fiscal costs of aging. It goes beyond a simple quantification of the fiscal impact by explicitly examining the trade-offs of alternative policies within the context of a general equilibrium overlapping generation framework. It is concluded that addressing the fiscal consequences of aging will require increasing the retirement age to 65 years, followed by further increases to keep up with demographic trends.
International Monetary Fund. External Relations Dept.
In Austria, the ratio of the elderly to people of working A. age will double over the next 50 years. This dramatic demographic shift—brought on by a major decline in fertility and mortality rates since the 1960s—will be more severe than in many other industrial countries (see chart). It will increase public spending on pensions, health care, and long-term care and decrease tax and social security revenues. In a new IMF Working Paper, LeifLybecker Eskesen concludes that ensuring long-term fiscal sustainability in Austria will require bold reforms.