Kamil Dybczak's research while affiliated with International Monetary Fund and other places

Declining fertility and increasing longevity will lead to a slower-growing, older world population. The share of the world population older than age 65 could increase from 12% today to 38% by 2100. In most countries, population is projected to peak sometime this century and decline thereafter. These developments would place public finances of countries under pressure. Spending on age-related programs (pensions and health) would rise by 8.3 percentage points of GDP and 11.5 percentage points of GDP in more and less developed countries, respectively, between now and 2100. Projecting demographics is a risky business, and policymakers should be prepared to deal with an even faster transition to declining populations. Given the magnitude of the needed policy response, a multi-pronged approach will be required, including entitlement reform, policies that affect demographics and labor markets, better tax systems, and more efficient public expenditure. In many countries it will be impossible to fully offset the impact of demographics on age-related spending, thus necessitating broader public sector reforms to improve the public finances.

Fiscal policy is often used to smooth fluctuations in economic activity, particularly in advanced economies. Because it reduces macroeconomic volatility, fiscal policy can boost real GDP growth. Specifically, a plausible increase in fiscal stabilization—measured as the sensitivity of the overall budget balance to the output gap—could boost annual growth rates by 0.1 percentage point in developing economies and 0.3 percentage point in advanced economies. Automatic stabilizers are an important component of fiscal stabilization, but many countries tend to suppress their impact in good times, leading to a significant buildup of public debt. Fiscal frameworks that promote fiscal stabilization through the cycle can foster more stable and higher growth while supporting debt sustainability. Countries seeking higher fiscal stabilization should avoid undermining automatic stabilizers with procyclical measures. Those seeking to enhance automatic stabilizers should do so without unduly increasing the size of the public sector or creating undesirable distortions (such as high marginal tax rates).

This Staff Discussion Note looks at the stark fiscal challenges posed by the decline and aging of populations between now and 2100. It finds that without reforms, pensions and health spending would rise to 25 percent of GDP by end-century in more developed countries (and 16 percent of GDP in less developed countries), with potentially dire fiscal consequences. Given the uncertainty underlying the population projections and associated large fiscal risks, a multi-pronged approach will be required. This could include entitlement reform—starting now but at a gradual pace; policies that affect demographics and labor markets; and better tax systems and more efficient public expenditure.

The purpose of his paper is to describe consumer behavior in the Czech Republic by estimating a demand system in which demand depends on income and prices, but also on other factors such as age, size of the household, and position on the labor market. We combine Household Budget Survey data with information on prices from alternative sources between 2000 and 2008. The main focus of our analysis is to provide estimates of both own-and cross-price and income elasticities, which can be used among other things when analyzing the impact of exogenous price changes on consumer demand. Based on our estimates, the commodity bundles of food, energy, and health and bodycare are necessary goods, as their budget elasticity is positive and below one at the same time. Clothing and shoes, transportation and communication, and education and leisure are luxury goods, with income elasticity above one. The own-price elasticities are negative for all commodity groups, as expected. The cross elasticities seem to be smaller than the own elasticities.We found expenditure on energy and transportation and communication to be the most affected by changes in their own prices. We use our estimates to analyze the impact of regulated price changes on consumer demand and discuss the further potential use of our results.

This paper presents evidence on the extent of real wage flexibility in 24 EU member countries based on the Eurostat labour cost data covering 2000Q1-2010Q2. The term 'wages' refers, for brevity, to total hourly labour costs and their two main components, namely wages and salaries per hour, and non-wage costs. Following the structural VAR approach, real wage flexibility is measured as the responsiveness of real wages to real (permanent) versus nominal (temporary) shocks. The data shows that the impact of the 2008/2009 crisis on real wage adjustment has not been uniform across the sample countries, with some evidence for an increase in real wage rigidity. A strong negative correlation is observed between our aggregate measure of wage flexibility and both the ESCB Wage Dynamics Network firm-level survey estimates of downward real wage rigidity and the International Wage Flexibility Project microeconomic estimates of downward real wage rigidity. Finally, we find that institutional features of labour markets could help explain the variation in the results across countries; for example, stricter employment protection legislation and stronger presence of unions go hand in hand with higher real wage rigidity.