Uncertain Demographics and Fiscal Sustainability

Cambridge University Press
Edition: Illustrated, 3/13/2008
EAN 9780521877404, ISBN10: 0521877407

Hardcover, 300 pages, 22.9 x 15.2 x 2.1 cm
Language: English

There is widespread acceptance that much of the developed world faces a potential pensions and welfare crisis as a result of declining birth rates and an ageing population. However, there is considerable uncertainty about the specifics of demographic forecasting and this has significant implications for public finances. Uncertain Demographics and Fiscal Sustainability addresses the economic consequences of uncertainty and, with particular reference to European economies, explores the impact of demographic risks on public finances, including pension systems, health care and old-age care expenditures. Covering a spectrum of theoretical and empirical approaches, different types of computational models are used to demonstrate not only the magnitudes of the uncertainties involved but also how these can be addressed through policy initiatives. The book is divided into four parts covering demographic, measurement, policy and methodological issues. Each part is followed by a discussion essay that draws out key elements and identifies common themes.

List of figures
List of tables
List of contributors
Preface
1. Introduction Juha M. Alho, Svend E. Hougaard Jensen and Jukka Lassila
Part I. Uncertain Demographics
2. Changing views of future demographic trends Nico Keilman, Harri Cruijsen, and Juha M. Alho
3. Empirically-based specification of forecast uncertainty Juha M. Alho, Harri Cruijsen and Nico Keilman
Comment
the UPE forecasts
strengths, innovations, developments Shripad Tuljapurkar
Part II. Measuring Sustainability in a Stochastic Environment
4. Fiscal implications of demographic uncertainty
comparisons across the European Union Martin Weale
5. Demographic uncertainty and pension projections Jukka Lassila and Tarmo Valkonen
6. Demographic uncertainty and health care expenditure Namkee Ahn
Comment
assessing the uncertainty in long-term fiscal projections Pablo Antolin
Part III. Enhancing Sustainability
7. Evaluating pension reforms in the German context Hans Fehr and Christian Habermann
8. Longevity adjustment of pension benefits Jukka Lassila and Tarmo Valkonen
9. Ageing, demographic uncertainty and optimal fiscal policy Alex Armstrong, Nick Draper, André Nibbelink and Ed Westerhout
Comment
computable equilibrium models in policy analysis
future directions D. Peter Broer
Part IV. Extensions
10. Macroeconomic consequences of demographic uncertainty in world regions Vladimir Borgy and Juha M. Alho
11. Informational assumptions, aggregate mortality risk and life cycle saving Juha M. Alho and Niku Määttänen
12. Longevity adjustment of retirement age and intergenerational risk sharing Svend E. Hougaard Jensen and Ole Hagen Jørgensen
13. A general equilibrium analysis of annuity rates in the presence of aggregate mortality risk Justin van de Ven and Martin Weale
Comment
the economics of demographic uncertainty Martin Flodén
Index.

'In this volume economists for the first time come to grips with the substantial impact of demographic uncertainty on the economy and public finances. It contains not only important methodological contributions but also provides fresh insights on how demographic risks can best be shared across generations.' Lans Bovenberg, Director, Netspar, Tilburg University 'Due to population aging, public pensions and health-care systems are under pressure throughout the industrial world and beyond. But this pressure is mostly seen in long-term projections of unsustainability. It is difficult for governments to sell painful reforms such as privatization and delayed retirement in the face of uncertain futures. This timely and important book, edited by a world leader in the field, provides an explicit state-of-the-art evaluation of uncertainty in budget projections.' Ronald Lee, Edward G. and Nancy S. Jordan Endowed Chair in Economics and Professor of Demography and Economics, University of California, Berkeley