The Volatility of Oil Wealth under Uncertainty about Parameter Values
AbstractAslaksen et al. (1990) concluded that the petroleum wealth of Norway, and hence the permanent income from petroleum extraction, was as uncertain as the yearly oil revenues. Their conclusion was based on wealth estimates using official price projections, with no independent empirical analysis of the oil price process. In this paper the wealth estimates are based on an empirical analysis of the oil prices. We find that the best estimate of the roots of the price process indicates a more stable wealth than the conclusions in Aslaksen et al. (1990) indicated. If we introduce a possible shift in the price process at the time of OPEC I in 1974, the price shift in OPEC II, has an indirect effect on petroleum wealth through its influence on the best parameter estimate. This indirect effect is considerable, and the main conclusions from Aslaksen et al. (1990) are maintained in spite of the low roots.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Research Department of Statistics Norway in its series Discussion Papers with number 110.
Date of creation: Apr 1994
Date of revision:
Resource wealth; Parameter uncertainty.;
Find related papers by JEL classification:
- H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
- Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (J Bruusgaard).
If references are entirely missing, you can add them using this form.