Population Age Structure And The Budget Deficit

Derek H. C. Chen

Abstract


This paper focuses the effects of age-structure changes on the size of budget deficits of national governments.  More specifically, it determines whether differences in age-structure can account for the observed differences in budget deficits across countries as well as across time.  Via an extension of the untested theory of negative bequest motives advocated by Cukierman and Meltzer (1989), this paper argues that the commonly accepted notion that population aging tends to increase the budget deficits of economies is theoretically consistent.  However, preliminary results from country and time fixed-effects panel regressions, estimated from 1972 to 1992 over 60 developed and developing countries indicate statistical evidence for this postulation is present only in the developing countries but not in the developed countries.

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Copyright (c) 2016 Derek H. C. Chen

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.