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Demographic Uncertainty and Fiscal Policy. ENEPRI Research Reports No. 20, 21 August 2006

Armstrong, Alex and Draper, Nick and Nibbelink, Andre and Westerhout, Ed. (2006) Demographic Uncertainty and Fiscal Policy. ENEPRI Research Reports No. 20, 21 August 2006. UNSPECIFIED.

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    Abstract

    It is well known by now that population ageing threatens the sustainability of fiscal policies in many countries. Although a number of policy options are available to address the problem, the uncertainty surrounding the future development of the population complicates matters. This paper analyses the economic, intergenerational and welfare effects of several alternative taxation policies that can be used to close the fiscal sustainability gap: immediate tax smoothing, delayed tax smoothing and balanced budget policies. A distinction is made between a consumption tax and a labour income tax. In addition, the influence of demographic uncertainty on the results of these policies is analysed from a number of perspectives. Simulated population shocks show the effect of demographic volatility on macroeconomic and fiscal variables. Stochastic simulations are presented to produce probabilistic bounds for the future development of the economic outcomes and to analyse the issue of optimal fiscal policy under uncertainty.

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    Item Type: Other
    Subjects for non-EU documents: EU policies and themes > Policies & related activities > tax policy
    EU policies and themes > Policies & related activities > economic and financial affairs > fiscal policy
    Subjects for EU documents: UNSPECIFIED
    EU Series: UNSPECIFIED
    ["eprint_fieldname_eusries" not defined]: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Centre for European Policy Studies (Brussels) > ENEPRI Research Reports
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 08 May 2009
    Page Range: p. 31
    Last Modified: 06 Apr 2012 13:25
    URI: http://aei.pitt.edu/id/eprint/9483

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