An aging population and sustainable government debt: The case of Korea

Although we have recently seen fiscal stress rising in many countries due to an increase in government spending and a rapidly aging population, there has been little research into fiscal sustainability while explicitly taking into account the fiscal stress caused by population aging. In this paper,...

Full description

Saved in:
Bibliographic Details
Published inJournal of Asian economics Vol. 95; p. 101831
Main Author Park, Kwangyong
Format Journal Article
LanguageEnglish
Published Elsevier Inc 01.12.2024
Subjects
Debt sustainability
Fiscal limits
National Pension
Population aging
E62
H60
Debt sustainability
Fiscal limits
National Pension
H55
Population aging
Online AccessGet full text

Cover

More Information
Summary:Although we have recently seen fiscal stress rising in many countries due to an increase in government spending and a rapidly aging population, there has been little research into fiscal sustainability while explicitly taking into account the fiscal stress caused by population aging. In this paper, we follow the same methodology as seen in Bi (2012) and examine the fiscal space of Korea, which has one of the fastest aging populations. This analysis shows that ignoring population aging leads to an over-estimation of fiscal space as large as 130% of GDP. Both increasing social security spending and supporting the National Pension significantly affect fiscal space. Finally, it is shown that fiscal sustainability and National Pension reform are closely related.
ISSN:1049-0078
DOI:10.1016/j.asieco.2024.101831