Fiscal calculations on the Greek deficit

In previous Notes for Discussion, we addressed a possible path for real GDP, the deflator as a measure of prices and inflation, and the path for nominal GDP. We concluded that the projection for nominal GDP yielded an average growth rate between 2018-2080 of around 2.5 percent a year, with somewhat higher nominal growth in the 2020s as unemployment is coming down, weaker growth in 2030s-2040s as the demographic pull of a declining population restricts employment, and then a transition to around the long-term average again from 2050 onward.

Needless to say, these numbers come from considering population projections, demographic transition toward an elderly population and aspirational assumptions about productivity growth and future inflation, so the projections are not predictions or guarantees of what will happen, but a reasoned narrative of what is most likely to happen,...