IMF Staff Country Reports

Cyprus: Selected Issues

Publication Date:

February 21, 2007

Electronic Access:

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Summary:

This Selected Issues paper explores the economic consequences of aging and its impact on long-term fiscal sustainability for Cyprus. The study analyzes the potential macroeconomic impact of different approaches to deal with the fiscal costs of aging. It goes beyond a simple quantification of the fiscal impact by explicitly examining the trade-offs of alternative policies within the context of a general equilibrium overlapping generation framework. It is concluded that addressing the fiscal consequences of aging will require increasing the retirement age to 65 years, followed by further increases to keep up with demographic trends.

Series:

Country Report No. 2007/071

Subject:

Aging Expenditure Labor Pension spending Pensions Population and demographics Retirement Wages