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Unit Cost Budgeting: The Uncertainty Problem (3/4)

In this blog piece – the third in a series of four – I look at why budgeting based on unit costs doesn’t work well for services where there is a lot of uncertainty about the quantity of output which government will need to deliver. This is one of the key reasons why unit cost […]

Making Spending Review Fit for Purpose

Spending review, as I wrote recently, will be needed more than ever in the post-pandemic era. Surely, then, it is encouraging that there has over the past decade been a major expansion in the number of countries practicing spending review? Well, yes, but there is a problem. The problem is that in some countries, the […]

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Population Aging and Public Expenditure: Lessons from Japan

I’ve commented previously on the widespread tendency to exaggerate the impact of population ageing on public expenditure. Sure, it is an important source of upward spending pressure, particularly on long-term care and pensions. However, by far the biggest single area of spending pressure in coming decades will be health, and population ageing plays only a […]

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The Future US Debt Crisis

Faced with the pandemic, big deficits and increased debt are not only inevitable, but desirable – on a strictly temporary basis. This is something on which nearly all economists agree. But this does not mean that high debt has someone become acceptable in the longer term. In the longer term, it creates huge risks. The […]

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Long-Term Care Spending Will Grow Greatly

Although it is not the main driver of rising health expenditure, population aging will be a significant source of pressure on government budgets in other areas. Age pensions will, in some countries, be part of the problem. In the United States, for example, Congressional Budget Office projections suggest that government age pension spending will rise […]

Population Aging & Health Spending

There is a widespread notion that demographic aging will be the most important single factor driving health expenditure up over coming decades – or that, at a minimum, its impact on spending will be as great as any of the other forces which may be at work to increase spending. This is, however, wrong. Why […]

Bioscience Revolution To Drive Health Spending Up

In Bigger Government: The Future of Government Expenditure in Advanced Economies I show that government spending is set to increase greatly over the coming three decades in all advanced countries because of powerful external forces and pressures which will operate irrespective of the political orientations of governments. Overshadowing everything else will be very large long-term […]

Post-Pandemic Fiscal Consolidation?

Impacted by the COVID-19 pandemic, the budget deficits of advanced economies are projected to reach 15 percent of GDP on average this year. Debt, already high, is set to increase by more than 20 percent of GDP. What can and should be done to fix public finances after the pandemic is over? The last thing […]