Front Matter Page
Fiscal Affairs Department
Authorized for distribution by Manmohan S. Kumar
Contents
I. Introduction
II. Evolution of Age-Related Expenditures
III. Evaluating Changes in Fiscal Sustainability
A. Indicators for Assessing Fiscal Sustainability
B. Data
C. Estimation Results: Primary Gaps
D. Robustness
IV. Delayed Versus Immediate Fiscal Adjustment: Macroeconomic Effects
V. Conclusion
Tables
1. Fiscal Positions as of 2005
2. Estimation Results: Primary Gaps in 2005
3. Estimated Fiscal Impact of Recent Pension and Health Care Reforms
4. Debt-Target Primary Gap for Alternative Target Years: 60 Percent Debt-to-GDP Ratio Target
5. Impact of Changing the Debt Target on Debt-Target Primary Gap
6. Impact of Higher Aging Costs on Intertemporal Primary Gap
7. Effect on Intertemporal Primary Gap of Reducing the Growth-Adjusted Interest Rate by 1 Percentage Point
Figures
1. Projected Cumulative Growth in Old-Age Population and Increase in Age-Related Spending Relative to 2005
2. Closing the Primary Gap: Gross Debt Dynamics, 2005-2080
3. Rolling Estimates of the Intertemporal Primary Gap, 2001–05
4. Public Debt, Restoring Sustainability Immediately and with a Delay
5. Primary Fiscal Balance: Restoring Sustainability Immediately and with a Delay
6. Real GDP: Restoring Sustainability Immediately and with a Delay
7. Debt Dynamics and Aging Costs in the Stylized Example
Appendices
1. Sustainability Indicators
2. The Global Fiscal Model
Appendix Tables
8. Stylized Example of How to Calculate the Primary Gaps
References