Generational Distribution of Fiscal Burdens: A Positive Analysis

2023/07/04 by Yuki Uchida, Tetsuo Ono · 1 citation
Economics, Econometrics and Finance · Business, Management and Accounting · #Fiscal Policy and Economic Growth #Fiscal Policies and Political Economy #Financial Literacy, Pension, Retirement Analysis

paper · doi:10.1111/iere.12654

Abstract

Abstract This study presents an overlapping generations model to analyze the impact of population aging on fiscal policy and intergenerational fiscal burden. Aging populations incentivize governments to increase capital and labor income tax rates and the public debt‐to‐GDP ratio, consistent with OECD evidence. Our model‐based simulation for Japan and the United States (2000–2070) reveals that Japan will experience higher labor income tax rates, a greater public debt‐to‐GDP ratio, and a lower government expenditure‐to‐GDP ratio compared to the United States. From 2040 onward, Japan is predicted to surpass the United States in terms of the capital tax rate.

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