Demographic Change and Public Sector Budgets in a Federal System

Michael Hofmann, Gerhard Kempkes and Helmut Seitz

No 2317, CESifo Working Paper Series from CESifo

Abstract: This paper examines the effects of demographic change on public finances in a federal system. We develop a simple methodical procedure to measure the effect of demographic changes on public revenues and expenditures. We apply our method to the local, state and federal government sector as well as on the social security system in Germany. Our results suggest that demographic change will lead to significant vertical fiscal imbalances between the different layers of government. In addition we show, that subnational governments can generate a demographic dividend whereas the social security system and the federal government have to carry an additional burden due to ageing.

Keywords: fiscal federalism; demographic change; sustainability of public finances (search for similar items in EconPapers)
JEL-codes: H11 H68 H77 J11 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_2317

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