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In this paper, we investigate two fiscal policy options to mitigate fiscal pressure arising from ageing of the Australian population: pension cuts or tax hikes. Using a computable overlapping generations model, we find that while both policy options achieve the same fiscal goal, the...
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Several countries, including Australia, have a means-tested public age pension. Means testing the age pension can reduce the overall fiscal burden relative to a universal pension, but can also distort households’ incentives to work and save. Policymakers can influence the sizes of these...
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