Brunner, A., (2004), “Investment Trends and Business Capital Stock in OECD Countries: Long-Term Developments and Future Prospects”, IMF Country Report No. 04/340
European Commission, (2006), “The Impact of Ageing on Public Expenditure: Projections for the EU25 Member States on Pensions, Health Care, Long-term Care, Education and Unemployment Transfers (2004–2050)”, Special report No. 1/2006.
Faruquee, H., (2002), “Population Aging and its Macroeconomic Implications: A Framework for Analysis”, IMF Working Paper WP/02/16.
Prepared by Keiko Honjo.
Reforms in 1999 and 2003 cut personal income tax rates.
For indirect tax revenue, the permanent component is assessed by evaluating private consumption*/Output* relative to that of the base year (* denotes potential). For direct tax revenue, labor income consistent with NAIRU at each point in time is assessed relative to the base year—the base year being a period in which the output gap is zero.
Pension expenditures reflect updated projections from the Ministry of Economy and Finance in the framework of the forthcoming 2009 AWG Report.
Excluding pension expenditures that are available until 2060.
A precise calculation of the NPV of future primary balances involves considering an infinite time horizon. For convenience, a 50 year horizon is used here.
Increases in aging costs associated with unemployment may be lower but its magnitude is small compared with pressures from health and pension expenditures.