Smoothing the fiscal costs of population ageing in Australia: Effects on Intergenerational Equity and Social Welfare
View/ Open
Author(s)
Guest, Ross
Griffith University Author(s)
Year published
2008
Metadata
Show full item recordAbstract
This paper applies an overlapping generations model in order to evaluate the case for smoothing the fiscal costs associated with population ageing. The motivation is the establishment in Australia of the Future Fund which acts to smooth the tax burden over time. The conclusion is that tax smoothing of the order implied by the Future Fund yields a gain in social welfare in the order of 1.0 per cent in equivalent annual increases in GDP. All current generations of workers and retired workers are worse off, with middle-aged workers the worst affected, but future generations are better off and by larger magnitudes.This paper applies an overlapping generations model in order to evaluate the case for smoothing the fiscal costs associated with population ageing. The motivation is the establishment in Australia of the Future Fund which acts to smooth the tax burden over time. The conclusion is that tax smoothing of the order implied by the Future Fund yields a gain in social welfare in the order of 1.0 per cent in equivalent annual increases in GDP. All current generations of workers and retired workers are worse off, with middle-aged workers the worst affected, but future generations are better off and by larger magnitudes.
View less >
View less >
Journal Title
The Economic Record
Volume
84
Issue
265
Publisher URI
Copyright Statement
© 2008 Wiley-Blackwell Publishing. This is the author-manuscript version of the paper. Reproduced in accordance with the copyright policy of the publisher. The definitive version is available at www.interscience.wiley.com
Subject
Economics
Commerce, management, tourism and services