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Public debt, population ageing and medium-term growth

Alistair Dieppe (), Ricardo Mourinho Félix, Luca Marchiori (), Owen Grech, Maria Albani, Laure Lalouette, Dmitry Kulikov, Niki Papadopoulou (), Dimitris Sideris, Delphine Irac, Esther Gordo (), Edgar Vogel, Paolo Guarda, Alberto Gonzalez Pandiella, Juha Kilponen () and Lisa Rodano

No 165, Occasional Paper Series from European Central Bank

Abstract: This paper analyses the challenges that high public debt and ageing populations pose to medium-term growth. First, macroeconometric model simulations suggest that medium-term growth can benefit from credible fiscal consolidation, partly through reductions in sovereign risk premia. Second, a disaggregated growth accounting exercise suggests that the impact of population ageing on medium-term growth can be mitigated by structural reforms boosting labour force participation. Finally, general equilibrium models suggest that pay-as-you-go public pension systems will require reforms combining lower benefits, a later retirement age and higher social contributions. These findings suggest several policy recommendations: (a) JEL Classification: E17, E23, E24, E62, F47, J1

Keywords: ageing; Fiscal consolidation; medium-term growth; pensions; sovereign debt; structural reforms (search for similar items in EconPapers)
Date: 2015-08
Note: 95834
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