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Population Ageing and Social Expenditure in New Zealand: Stochastic Projections - WP 02/28

Publication Details

  • Population Ageing and Social Expenditure in New Zealand: Stochastic Projections
  • Published: Dec 2002
  • Status: Current
  • Authors: Creedy, John; Scobie, Grant M
  • JEL Classification: E61; H50; J11
  • Hard copy: Available in HTML and PDF formats only.
 

Population Ageing and Social Expenditure in New Zealand: Stochastic Projections

New Zealand Treasury Working Paper 02/28

Published: December 2002

Authors: John Creedy and Grant M Scobie

Abstract

It is widely recognised that as the population ages there will be potentially significant implications for a wide range of economic variables, including in particular the fiscal costs of social expenditures. Long term fiscal planning requires estimates of the possible future path of public spending. This paper presents projections for 14 categories of social spending. These projections are based on detailed demographic estimates covering fertility, migration and mortality disaggregated by single year of age and gender. Distributional parameters are incorporated for all of the major variables, and are used to build up probabilistic projections for social expenditure as a share of GDP using simulation. Attention is focussed on health expenditures which are disaggregated into seven broad classes. In addition we explore the impacts of alternative hypothesis about future health costs. While it can be predicted with some confidence that overall social expenditures will rise, the results suggest that long term planning would be enriched by recognising the distributions about point estimates of projected social costs.

Table of Contents

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Abstract

Table of Contents

List of Tables

List of Figures

1 Introduction

2 The projection model

3 Input data and projections

4 Benchmark results

5 Impact of Varying Assumptions

6 Conclusions

References

Appendix Figures

Appendix Tables

twp02-28.pdf (545 KB) pp. 1–46

List of Tables

List of Figures

Acknowledgements

The authors acknowledge assistance from Ivan Tuckwell and Statistics New Zealand in providing data, John Bryant and Grant Johnston for help with the health costs, Malcolm McKee for help with social expenditures, and a significant input to the analysis of the results contributed by Vito Schultz.

Disclaimer

The views expressed in this Working Paper are those of the author(s) and do not necessarily reflect the views of the New Zealand Treasury.  The paper is presented not as policy, but with a view to inform and stimulate wider debate.

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