Abstract
New Zealand, like many other countries, is experiencing a changing demographic profile from one dominated by young people during the twentieth century to one where the population is more evenly distributed across age groups. This has implications for the government's future fiscal position and sustainability of its spending programmes. This article discusses the link between the government budget constraint and fiscal sustainability, measures of fiscal sustainability, and why it is important. We examine New Zealand Treasury's approach to assessing fiscal sustainability, review lessons from previous fiscal adjustments, and discuss criteria to evaluate policy changes designed to achieve fiscal sustainability.
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