The age for austerity? Population age structure and fiscal consolidation multipliers

Advanced economies face two important trends: population aging and rising debt. In the coming years, it will be critical to understand how policies undertaken by governments interact with their changing age structures. a panel of advanced economies, I show that fiscal deficit consolidation multipliers are highly sensitive changes in age. The demographic transmission shocks differs between spending cuts tax hikes, variation within working across dependent groups. Tax increases lead weaker output response relatively young strengthening as weights move middle age, falling again large shares retirees. Output spending, on other hand, shows little change demographics. both deficits suggests significant dependence, impacts when constructed ratio cumulative effects. Projecting forward, my estimates expect smaller baby boomer cohort fully retires, demographics accommodating consolidations terms stronger improvements, policy displaying response.