The paper examines what current fiscal policy and expected future age-related spending imply for the path of debt/GDP ratios over the next decades. The projections of public debt ratios suggest that the path pursued by fiscal authorities in a number of industrial countries is unsustainable.
Since the start of the financial crisis, industrial country public debt levels have increased dramatically. And they are set to continue rising for the foreseeable future. A number of countries face the prospect of large and rising future costs related to the ageing of their populations.
This paper examines what current fiscal policy and expected future age-related spending imply for the path of debt/GDP ratios over the next several decades. BIS’s projections of public debt ratios lead it to conclude that the path pursued by fiscal authorities in a number of industrial countries is unsustainable. Drastic measures are necessary to check the rapid growth of current and future liabilities of governments and reduce their adverse consequences for long-term growth and monetary stability.
© BIS - Bank for International Settlements
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