Template-Type: ReDIF-Article 1.0

Author-Name: Manoj Pradhan
Author-Workplace-Name: Talking Heads Macro
Author-Email: manoj@talkingheadsmacro.com
Author-Person:

Author-Name: Charles Goodhart
Author-Workplace-Name: London School of Economics
Author-Email: C.A.Goodhart@lse.ac.uk
Author-Person:

Title: Fiscal Risks in an Ageing World and the Implications for Monetary Policy

Abstract: Ageing societies are likely to face rapidly changing structural macroeconomic
trends, with fiscal balances likely to worsen over time. It is widely acknowledged
by forecasters and financial markets that debt-to-GDP ratios are tending to rise over
time, but there are signs that the size and persistence of future deficits and debts
may be underestimated. This underestimation comes from three sources: i) incorrect
consideration of the medical complications of older cohorts; ii) a demography-driven
rise in inflation, real interest rates and interest expenses; and iii) misalignment of
fiscal and monetary policy incentives in an inflationary environment. We argue that
a new era is starting, when we will have to face complicated relations between
demography, and fiscal and monetary policy.

Classification-JEL: E20, E30, E40, E50, I11, J11, J14, N10, N30, P10
Keywords: Demography, globalisation, China, ageing, inflation, inequality, debt, monetary and fiscal policies
Pages: 69-79
Volume: 23
Issue: 4
Year: 2024
File-URL: https://hitelintezetiszemle.mnb.hu/sw/static/file/fer-23-4-st4-pradhan-goodhart.pdf
File-Format: Application/pdf
Handle: RePEc:mnb:finrev:v:23:y:2024:i:4:p:69-79