Due to rising life expectancy and declining fertility, the world’s population is ageing rapidly. Not only does the number of elderly relative to the number of working-age people increase, so does the proportion of the very old in the general population of the aged. In consequence, government...

The macroeconomic and cross-generational effects of policies aiming at public debt reduction are shown to depend crucially on how wages respond to the associated tightening of fiscal policy. In order to dampen the adverse transitional effects on the macroeconomy and in order to protect currently...

This paper analyses the effects of cuts in the marginal tax rates on income from labour and capital on the macroeconomy and on the intergenerational distribution of welfare in a small open economy. For this purpose we et up a computable general equilibrium model incorporating overlapping...

This paper studies some macroeconomic effects in a small open economy of the fiscal policy rules implied by the Maastricht convergence criteria. The focus is upon the adjustment process in the run-up to EMU. Two country-specific shocks leading to higher public debts are considered: a fall in the...

Flexibility in fiscal policy is a necessary ingredient in a policy package for EMU. Even with strong endogenous shock absorbers, such as real wage flexibility, fiscal policy can speed up the stabilisation process in response to demand shocks. If real wages are rigid, as they typically are in...