Assessing Components of Uncertainty in Demographic Forecasts with an Application to Fiscal Sustainability

Alho JuhaLassila Jukka


When the future evolution of demographic processes is described in a stochastic setting, the challenge is to communicate the meaning of forecast uncertainty in an understandable way, to decision makers and public at large. For the purpose of risk communication, a formal setting is developed in which the roles of the demographic processes on point forecasts, and more generally, on predictive distributions, can be elucidated. The communication problem becomes central in fiscal decision making, when eventual forecast errors have differential implications on the value of the policy options being considered. Tax rate that is required to maintain financial sustainability, until a given target year, is used for illustration.

Journal of Forecasting, 1–9.

Publication info

Research group
Macroeconomy and public finances
Aging, Demography, Predictive distribution, Risk communication, Spending gap, Stationary equivalent population
Publisher / series
Journal of Forecasting, 1–9
Download the publication