Dr Chung Tran is a senior lecturer at the Research School of Economics, The Australian National University. His primary research interests lie in the areas of macro/public finance. Much of his recent work focuses on evaluating the foundations of social security and health insurance systems, analysing growth and welfare implications of fiscal policy, and understanding the dynamic effects of debt financing and fiscal austerity measures.

In this seminar Dr Tran will discuss two fiscal policy options to mitigate fiscal pressure arising from an ageing of Australian population: pension cuts or tax hikes, using a dynamic general equilibrium, overlapping generations (OLG) model. Specifically, he will examine the fiscal cost of demographic shift and implications of these two reform options for Australian households and economy. His main results are summarised as follows. First, while the two policy options achieve the same fiscal goal, the macroeconomic and welfare outcomes differ significantly. Future generations prefer pension cuts, whereas current generations prefer tax hikes to finance age-related government spending commitments. Second, taxing consumption or directly income results in opposing effects on macroeconomic aggregates and welfare across different skill types of households. Increases in the consumption tax (GST) rate have positive effects on labour supply, domestic assets and output per capita (similarly to pension cuts), but reduce the welfare of low income households most. Conversely, increases in progressive income or payroll taxes have negative effects on most macroeconomic aggregates but reduce the welfare of low income households least.

This seminar is based on research Dr Tran co-authored with George Kudrna and Alan Woodland.

Light lunch will be provided from 12pm to 12.25pm.

Presentations slides.