Title: Setting targets for government budgets under the EU Stability and Growth Pact and ageing populations

Authors: Heikki Oksanen

Addresses: Economic and Financial Affairs, European Commission, BU-1, 5/179, B-1049 Brussels, Belgium

Abstract: Originally, in 1997, balanced budget or surplus was set as medium-term objective (MTO) for government budgets under the European Union Stability and Growth Pact, while in 2005 the MTOs were made country-specific. They were agreed for a transitional period only, until the criteria for taking into account implicit pension liabilities are established. Work on this is still unfinished (May 2009). The paper specifically addresses the question of setting MTOs under alternative rules for the public pension system, based on |actuarial neutrality across generations| as a benchmark for intergenerational equity. The repercussions of the current crisis are discussed at the end.

Keywords: government budgets; medium-term objectives; public deficits; targets; public pensions; state pensions; pension liabilities; ageing populations; old people; elderly people; European Union; EU; Stability and Growth Pact; SGP; balanced budgets; budget surpluses; actuarial neutrality; intergenerational equity; Euro; business research; economics.

DOI: 10.1504/IJEBR.2010.029731

International Journal of Economics and Business Research, 2010 Vol.2 No.1/2, pp.87 - 111

Published online: 01 Dec 2009 *

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