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Could the decrease in Belgian government debt-servicing costs offset increased age-related expenditure? CEPS Working Document No. 2017/06, June 2017

Barslund, Mikkel and Ludolph, Lars (2017) Could the decrease in Belgian government debt-servicing costs offset increased age-related expenditure? CEPS Working Document No. 2017/06, June 2017. [Working Paper]

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    Abstract

    This paper argues that none of the secular trends that have driven down real interest rates over the past two decades is likely to reverse in the near future. Thus, real rates can be expected to remain low and government debt-servicing costs to decrease further over the coming years. Based on these findings, the authors calculate direct gains accruing to the Belgian government from lower net debt interest payments. The savings on interest payments are then contrasted with the projected future increases in age-related expenditures on pensions, education and long-term care. The findings indicate that, if savings on interest payments are channelled to cover the increases in age-related expenditures, they will fully offset financing needs in these areas until 2030. The calculations are robust to a moderate increase in interest rates.

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    Item Type: Working Paper
    Subjects for non-EU documents: Countries > Belgium
    EU policies and themes > Policies & related activities > economic and financial affairs > monetary policy
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Centre for European Policy Studies (Brussels) > CEPS Working Documents
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 02 Jun 2017 09:49
    Number of Pages: 24
    Last Modified: 02 Jun 2017 09:50
    URI: http://aei.pitt.edu/id/eprint/87770

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