Article ID Journal Published Year Pages File Type
998480 International Journal of Forecasting 2007 15 Pages PDF
Abstract

We forecast income growth over the period 2000–2050 in the US, Canada, and France. To ground the forecasts on relationships that are as robust as possible to changes in the environment, we use a quantitative theoretical approach which involves calibrating and simulating a general equilibrium model. Compared to existing studies, we allow for life uncertainty and migrations, use generational accounting studies to link taxes and public expenditures to demographic changes, and take into account the interaction between education and work experience. Forecasts show that growth will be weaker over the period 2010–2040. The gap between the US and the two other countries is increasing over time. France will catch-up and overtake Canada in 2020. Investigating alternative policy scenarios, we show that increasing the effective retirement age to 63 would be most profitable for France, reducing the gap between it and the US by one third. A decrease in social security benefits would slightly stimulate growth but would have no real impact on the gap between the countries.

Related Topics
Social Sciences and Humanities Business, Management and Accounting Business and International Management
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