Ageing costs, public debt sustainability and EU fiscal rules

Meryem Gökten and Philipp Heimberger

No 276, wiiw Working Papers from The Vienna Institute for International Economic Studies, wiiw

Abstract: This paper examines the role of ageing costs in the reformed EU fiscal rules. Governments must pre-emptively tighten fiscal policy to offset projected ageing cost increases, but required adjustments depend on underlying assumptions. Using alternative scenarios, we show that small changes in ageing cost assumptions can lead to marked differences in debt paths and consolidation needs. The framework ignores ageing-related uncertainty in these projections. Lower ageing costs may even raise long-run debt by reducing upfront tightening. Overall, our results highlight that fiscal adjustment requirements – and their economic effects – are highly sensitive to uncertain and arbitrary ageing-related assumptions.

Keywords: Ageing costs; fiscal policy; fiscal rules; austerity; public debt; debt sustainability (search for similar items in EconPapers)
JEL-codes: E62 J11 J14 (search for similar items in EconPapers)
Pages: 43 pages including 3 Tables and 13 Figures
Date: 2026-06
References: Add references at CitEc
Citations:

Published as wiiw Working Paper

Downloads: (external link)
https://wiiw.ac.at/ageing-costs-public-debt-sustai ... l-rules-dlp-7620.pdf (application/pdf)

Related works:
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:wii:wpaper:276

Ordering information: This working paper can be ordered from
https://wiiw.ac.at

Access Statistics for this paper

More papers in wiiw Working Papers from The Vienna Institute for International Economic Studies, wiiw Contact information at EDIRC.
Bibliographic data for series maintained by Customer service ().