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Ensuring Fiscal Sustainability in G-7 Countries
Author:
Mr. Daniel Leigh
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Mr. David Hauner
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Mr. Michael Skaarup
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Series:
IMF Working Papers
Volume/Issue:
Volume 2007: Issue 187
Language:
English
Publication Date:
01 Jul 2007
DOI:
https://doi.org/10.5089/9781451867510.001
ISBN:
9781451867510
ISSN:
1018-5941
Pages:
29
Keywords:
WP; debt; GDP; debt target; debt-target indicator
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Rising longevity, falling fertility rates, and the retirement of the baby boom generation will substantially raise age-related government spending in most advanced and many emerging market countries. This paper assesses the evolution of fiscal sustainability for each of the G-7 countries using two standard primary gap indicators. The estimated fiscal adjustment required to ensure long-run fiscal sustainability is substantial for all G-7 countries. In particular, ensuring fiscal sustainability would require an average improvement in the primary balance of about 4 percentage points of GDP. While the overall adjustment required to achieve long-run fiscal sustainability in G-7 countries is large, there are significant growth benefits to putting public finances on a sustainable footing in the near term versus delayed adjustment.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund