Global Aging Pressures: Impact of Fiscal Adjustment, Policy Cooperation, and Structural Reforms

Manmohan Kumar and Dennis Botman

No 2007/196, IMF Working Papers from International Monetary Fund

Abstract: Demographic pressures will materialize in many economies over the next few decades. We examine the macroeconomic impact of alternative fiscal adjustment and structural reform strategies to address these global aging pressures using the IMF's Global Fiscal Model (GFM). The results suggest substantial spillover effects of aging through international financial channels. To maintain sustainability, fiscal adjustment needs to be broad-based, while avoiding increases in direct taxes. There are substantial benefits from fiscal cooperation, while negative growth effects can be offset by complementary structural reforms in product and labor markets with the benefits accruing early and to all incomegroups.

Keywords: WP; euro area; product market; real GDP; real interest rate; government spending (search for similar items in EconPapers)
Pages: 58
Date: 2007-08-01
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Citations: View citations in EconPapers (2)

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