An aging population, in part through its effects on the solvency of public pension systems, raises serious questions about the sustainability of fiscal policy in many developed countries. Traditional economic theory says that public debt, whether explicit or implicit in the form of unfunded pension liabilities, can reduce national saving and thus lead to lower wage rates and incomes in the future. In addition to its effect on the public sector budget, demographic change has a direct effect on national saving. My proposed research will study the linkages between demographic change, the public sector budget, and national saving in Japan and the United States.