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Facing Demographic Challenges: Pension Cuts or Tax Hikes

Kudrna, George; Tran, Chung; Woodland, Alan


In this paper, we investigate two fiscal policy options to mitigate fiscal pressure arising from ageing of the Australian population: pension cuts or tax hikes. Using a computable overlapping generations model, we find that while both policy options achieve the same fiscal goal, the macroeconomic and welfare outcomes differ significantly. Future generations prefer pension cuts, whereas current generations prefer tax hikes to finance government spending commitments. Interestingly, taxing...[Show more]

CollectionsANU Research Publications
Date published: 2019
Type: Journal article
Source: Macroeconomic Dynamics
DOI: 10.1017/S1365100516001292


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