Table 8: Impact of a 10% permanent and temporary reduction in earned income taxes for workers aged 60 and over when the intertemporal rate of substitution increased, key macroeconomic indicators*.

Macroeconomic indicatorsPermanentTemporary
201020302050201020302050

Real GDP per capita 0.06 (−0.02)0.06 (0.01)0.10 (0.00) 0.09 (0.01)0.19 (0.01)0.07 (0.00)
Labour supply/capita0.11 (−0.02)0.18 (0.00)0.29 (0.01)0.13 (0.01)0.24 (0.00)0.04 (−0.01)
National savings−0.25 (0.04)−0.20 (−0.06)−0.23 (0.02)−0.19 (0.00)0.25 (0.04)0.16 (0.01)
Capital stock/capita−0.06 (−0.01)−0.29 (0.03)−0.47 (0.00)−0.03 (0.00)0.05 (−0.03)0.15 (−0.01)
Capital/labour ratio−0.18 (0.01)−0.54 (0.03)−0.92 (0.01)−0.18 (−0.02)−0.25 (−0.04)0.11 (0.00)
Real wages−0.05 (0.00)−0.14 (0.01)−0.24 (0.00)−0.05 (0.00)−0.07 (−0.01)0.03 (0.00)
Earned income tax rate−0.13 (0.00)−0.13 (0.00)−0.14 (0.00)−0.13 (0.00)−0.15 (0.00)−0.01 (0.00)

*Percentage point difference against the reference scenario. Values in brackets are differences compared to the first scenario. See Tables 3 and 5. The inter-temporal rate of substitution in the general equilibrium model is increased from 0.9 to 1.1.