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How to Assess Fiscal Implications of Demographic Shifts: A Granular Approach
Author:
Mr. David Amaglobeli
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Wei Shi
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Series:
IMF How To Notes
Volume/Issue:
Volume 2016: Issue 002
Language:
English
Publication Date:
27 Sep 2016
DOI:
https://doi.org/10.5089/9781475536072.061
ISBN:
9781475536072
ISSN:
2522-7912
Pages:
24
Keywords:
FADHTN; HTN; labor force; coverage ratio; age-gender cohort; medium-fertility scenario; status quo; expenditure elasticity; age structure; age-related expenditure; replacement rate; dependency ratio; demographics scenario GDP; age-related expenditure elasticity; consumption spending; low-fertility scenario; Aging; Demographic change; Labor force participation; Health care spending; Europe
Legal-disclaimer:
Fiscal Affairs Department (FAD) How to Notes offer practical advice from IMF staff members to policymakers on important fiscal issues. The views expressed in FAD How to Notes 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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Over the next few decades, the world will experience significant demographic shifts, with material fiscal implications. In many advanced and emerging market economies, aging populations will lead to higher spending on pensions and health care. Moreover, projected population dynamics will adversely affect growth and government revenues. Building on and extending a 2015 IMF Staff Discussion Note by Clements and others, this note presents a simple framework that can assist researchers in quantifying the effects of demographic changes resulting from population aging on government fiscal balances. It includes two country applications of the framework and an associated template. The note addresses several key questions: What are channels through which demographic changes could affect public finances? How can we quantify the fiscal impact of demographic changes? How can we tailor the assessment to country-specific circumstances?
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IMF How To Notes
ISSN:
2522-7912
Publisher:
International Monetary Fund