Fiscal Consolidation and the Implications of Social Spending for Long-Term Fiscal Sustainability

Rossana Merola and Douglas Sutherland

Review of Economics and Institutions, 2013, vol. 4, issue 3

Abstract: This paper sheds light on the scale of fiscal consolidation that will be needed toensure long-term sustainability and on the potential benefits of institutional reforms inmitigating budget pressures of social spending. Based on alternative scenarios, resultssuggest that, in several OECD countries, the fiscal challenges are exacerbated in the longterm by spending pressures related to health and pensions. This paper shows howinstitutional reforms may support long-term fiscal sustainability and, at the same time,reduce adverse short-term effects of fiscal consolidation on growth.

Keywords: fiscal consolidation; long-term public finance sustainability; public social expenditure; long-term projections; ageing populations (search for similar items in EconPapers)
JEL-codes: E62 H50 H68 J11 (search for similar items in EconPapers)
Date: 2013
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Working Paper: Fiscal Consolidation and Implications of Social Spending for Long-Term Fiscal Sustainability (2014)
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