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Policy uncertainty and cost of delaying reform: a case of ageing Japan

Research School of Economics

Event details

Seminar

Date & time

Wednesday 10 August 2016
12.00pm–1.00pm

Venue

Fred Gruen Economics Seminar Room, H W Arndt Building 25A, ANU

Speaker

Sagiri Kitao, Keio University, Japan.

Contacts

Macroeconomics Coordinator

Additional links

About the speaker

Sagiri Kitao, Keio University, Japan

With ageing demographics and generous pay-as-you-go social security, reform to reduce benefits is inevitable. Often times, however, timing and structure of reform are unknown. We explicitly model policy uncertainty in a general equilibrium life-cycle model. Using a case of Japan, that faces the severest demographic and fiscal challenges, we quantify welfare tradeoff across generations by delaying reform or reducing its scope. Individuals react to a delay in reform by dis-saving and working less, reducing output and raising taxes needed for a fiscal balance. Fiscal uncertainty itself hurts older individuals more, who become exposed to greater income risks.

Light lunch available.

The Research School of Economics hosts four active seminar series in Applied Microeconomics, Economic Theory, Macroeconomics as well as a General series. Speakers include international and locally well-known economists.

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