In this paper, sound public finances under the euro means sustainability in the long term instead of short- and medium-term fiscal discipline. The challenges to sustainability are identified for the four largest euro area member states, and several policy options for sustainability are...

This paper studies saving in an economy where decline in fertility to a permanently lower level and increasing longevity are changing the age structure permanently and where the public pension system helps to smooth consumption over a lifetime of working and retirement. A simple overlapping...

The paper examines pension reforms under ageing. With stylised facts, ageing is traced to low fertility and increasing longevity. Given these persistent factors, pension systems must be reformed to avoid an unfair burden being left for future generations. The main results for reform blueprints...

The paper examines pension reform under ageing. Using stylised facts, ageing is traced to low fertility and increasing longevity. Given these persistent factors, pension systems must be reformed to avoid an unfair burden being left for future generations.

The paper incorporates intergenerational fairness into a framework to analyse long-term sustainability of public finances under population ageing. It establishes a link between ageing-related public expenditure projections and public finance targets, thereby clarifying the connection between...

The paper examines the effects of ageing and makes a case for partial pre-funding of pensions. The argument is based on inter-generational fairness in a situation where pension expenditure as compared to wages increases due to low fertility and increasing longevity. We illustrate the approach by...

The Stability and Growth Pact (SGP) adopted in 1997 originally set budget balance as the medium-term objective (MTO) for all EU Member States, to create a safety margin under the 3% of GDP deficit ceiling. In a reform in 2005, MTOs were made country-specific and dependent on initial debt and the...

Preparations are underway to revise national accounting to implement actuarial recording of pension liabilities for corporations and government as an employer. This paper extends this to unfunded public pensions with the help of ‘implicit tax' in pension contributions. The clearest...