Demographic Change and Fiscal Sustainability in Asia

Sang-Hyop Lee, Jungsuk Kim () and Donghyun Park
Additional contact information
Jungsuk Kim: Sogang University

No 481, ADB Economics Working Paper Series from Asian Development Bank

Abstract: Changes in the population age structure can have a significant effect on fiscal sustainability since they can affect both government revenues and expenditures. For example, population aging will increase expenditures on the elderly while reducing potential growth and hence revenues. In this paper, we project government revenue, expenditure, and fiscal balance in developing Asia up to 2050. Using a simple stylized model and the National Transfer Accounts data set, we simulate the effect of both demographic changes and economic growth. Rapidly aging economies like the Republic of Korea; Japan; and Taipei,China, are likely to suffer a tangible deterioration of fiscal sustainability under their current tax and expenditure system. On the other hand, rapid economic growth can improve fiscal health in poorer economies with relatively young populations and still-growing working-age populations. Overall, our simulation results indicate that Asia’s population aging will adversely affect its fiscal sustainability, pointing to a need for Asian economies to further examine the impact of demographic shifts on their fiscal health.

Keywords: Asia; fiscal balance; fiscal projection; population aging; public spending; tax (search for similar items in EconPapers)
JEL-codes: H20 H50 H62 J11 J14 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2016-04-08
New Economics Papers: this item is included in nep-age, nep-pbe and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.adb.org/publications/demographic-chang ... -sustainability-asia Full text (text/html)

Related works:
Journal Article: Demographic Change and Fiscal Sustainability in Asia (2017)
Working Paper: Demographic Change and Fiscal Sustainability in Asia (2016)
Working Paper: Demographic Change and Fiscal Sustainability in Asia (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:adbewp:0481

Access Statistics for this paper

More papers in ADB Economics Working Paper Series from Asian Development Bank 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines. Contact information at EDIRC.
Bibliographic data for series maintained by Orlee Velarde ().