Generational Distribution of Fiscal Burdens: A Positive Analysis

MPRA Paper from University Library of Munich, Germany

Abstract: This study presents a political economy model with overlapping generations to analyze the effects of population aging on fiscal policy formation and the resulting distribution of the fiscal burden across generations. We show that population aging incentivizes the government to raise the capital and labor income tax rates as well as the ratio of public debt to GDP; this result is consistent with the cross-country evidence of OECD countries. We then undertake a model-based simulation over the period 2000-2070 for Japan and the United States and show that Japan is anticipated to face higher labor income tax rates, a greater public debt-to-GDP ratio, and a lower government expenditure-to-GDP ratio than the United States throughout the entire period. Moreover, starting form 2040, Japan is predicted to surpass the United States in terms of the capital tax rate.

Keywords: Generational burden; Overlapping generations; Political economy; Population aging; Public debt (search for similar items in EconPapers)
JEL-codes: D70 E24 E62 H60 (search for similar items in EconPapers)
Date: 2023-04-22
New Economics Papers: this item is included in nep-age, nep-dge and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://mpra.ub.uni-muenchen.de/113607/1/OU_7_revision.pdf original version (application/pdf)

Related works:
Journal Article: Generational Distribution of Fiscal Burdens: A Positive Analysis (2024)
Working Paper: Generational Distribution of Fiscal Burdens: A Positive Analysis (2021)
Working Paper: Generational Distribution of Fiscal Burdens: A Positive Analysis (2021)
Working Paper: Generational Distribution of Fiscal Burdens: A Positive Analysis (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:113607

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