Population Ageing and Social Expenditure in New Zealand: Stochastic Projections

John Creedy and Grant Scobie

No 02/28, Treasury Working Paper Series from New Zealand Treasury

Abstract: It is widely recognised that as the population ages there will be potentially significant implications for a wide range of economic variables, including in particular the fiscal costs of social expenditures. Long term fiscal planning requires estimates of the possible future path of public spending. This paper presents projections for 14 categories of social spending. These projections are based on detailed demographic estimates covering fertility, migration and mortality disaggregated by single year of age and gender. Distributional parameters are incorporated for all of the major variables, and are used to build up probabilistic projections for social expenditure as a share of GDP using simulation. Attention is focussed on health expenditures which are disaggregated into seven broad classes. In addition we explore the impacts of alternative hypothesis about future health costs. While it can be predicted with some confidence that overall social expenditures will rise, the results suggest that long term planning would be enriched by recognising the distributions about point estimates of projected social costs.

Keywords: Population; projections; stochastic simulation; social expenditure; fiscal costs; New Zealand (search for similar items in EconPapers)
JEL-codes: E61 H50 J11 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2002-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:nzt:nztwps:02/28

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