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dc.contributor.authorBalassone, Fabrizioen_US
dc.contributor.authorCunha, Jorge Correia daen_US
dc.contributor.authorLangenus, Geerten_US
dc.contributor.authorManzke, Bernharden_US
dc.contributor.authorPavot, Jeanneen_US
dc.contributor.authorPrammer, Dorisen_US
dc.contributor.authorTommasino, Pietroen_US
dc.description.abstractIn this paper we examine the sustainability of euro area public finances against the backdrop of population ageing. We critically assess the widely used projections of the Working Group on Ageing Populations (AWG) of the EU's Economic Policy Committee and argue that ageing costs may be higher than projected in the AWG reference scenario. Taking into account adjusted headline estimates for ageing costs, largely based upon the sensitivity analysis carried out by the AWG, we consider alternative indicators to quantify sustainability gaps for euro area countries. With respect to the policy implications, we assess the appropriateness of different budgetary strategies to restore fiscal sustainability taking into account intergenerational equity. Our stylised analysis based upon the lifetime contribution to the government's primary balance of different generations suggests that an important degree of pre-funding of the ageing costs is necessary to avoid shifting the burden of adjustment in a disproportionate way to future generations. For many euro area countries this implies that the medium-term targets defined in the context of the revised stability and growth pact would ideally need to be revised upwards to significant surpluses.en_US
dc.publisher|aDeutsche Bundesbank |cFrankfurt a. M.-
dc.relation.ispartofseries|aDiscussion paper Series 1 / Volkswirtschaftliches Forschungszentrum der Deutschen Bundesbank |x2009,04en_US
dc.subject.keywordpopulation ageingen_US
dc.subject.keywordfiscal sustainabilityen_US
dc.subject.keywordgenerational accountingen_US
dc.subject.keywordmedium-term objectives for fiscal policyen_US
dc.subject.stwAlternde Bevölkerungen_US
dc.subject.stwÖffentliche Ausgabenen_US
dc.subject.stwIntergenerative Belastungsrechnungen_US
dc.titleFiscal sustainability and policy implications for the euro areaen_US
dc.typeWorking Paperen_US

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