The paper describes the fiscal framework used in long-term economic scenarios, with some emphasis on revisions made since the 2013 vintage of the long-term model. Long-term projections for public spending on pensions, health and long-term care are now separate from other primary expenditure and sourced from previous OECD work taking account of population ageing and other cost pressures. Other primary expenditure are assumed to remain constant in real terms on a per capita basis, rather than remaining stable as a share of GDP. This difference is important for long-term fiscal projections because government finances are sensitive to the employment rate, whereas expenditure is linked to the total population. A fiscal rule adjusts government revenue to ensure that public debt eventually stabilises as a share of GDP, making government revenue as a share of GDP the preferred indicator of future fiscal pressure.
