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Computable General Equilibrium Assessments of Fiscal Sustainability in Norway

  • Holmøy, Erling
  • Strøm, Birger
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    The chapter demonstrates how the computable general equilibrium model MSG6, combined with special models of government expenditures, has been used to assess the long-run fiscal sustainability in Norway. The simulations suggest that Norway faces a severe fiscal sustainability problem in the long run, despite an exceptionally strong fiscal position at present. This result is found to be relatively robust to exogenous variations in productivity growth, petroleum prices, longevity, immigration and the health of the elderly. The chapter also discusses the fiscal effects of various policy responses, including the pension reform of 2011, improvements in the standards of public health services and care for the elderly, as well as a tighter fiscal policy rule. The simulation experiments demonstrate that general equilibrium mechanisms contribute significantly to the total effects.

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    This chapter was published in:
  • Peter B. Dixon & Dale Jorgenson (ed.), 2012. "Handbook of Computable General Equilibrium Modeling," Handbook of Computable General Equilibrium Modeling, Elsevier, edition 1, volume 1, number 1, 05.
  • This item is provided by Elsevier in its series Handbook of Computable General Equilibrium Modeling with number v:1:y:2013:i:c:p:105-158.
    Handle: RePEc:eee:hacchp:v:1:y:2013:i:c:p:105-158
    Contact details of provider: Web page: http://store.elsevier.com/Handbook-of-Computable-General-Equilibrium-Modeling/isbn-9780444536341/

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    19. Steigum, E.Jr., 1992. "Accounting for Long-Run Effects of Fiscal Policy by Means of Computable Overlapping Generations Models," Papers 05-92, Norwegian School of Economics and Business Administration-.
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    22. Kyrre Stensnes, 2007. "Equity versus Efficiency in Public Pension Schemes. Microsimulating the Trade-off," Discussion Papers 515, Statistics Norway, Research Department.
    23. Lindbeck, Assar & Persson, Mats, 2002. "The Gains from Pension Reform," Working Paper Series 580, Research Institute of Industrial Economics.
    24. Laurence J. Kotlikoff & Kent Smetters & Jan Walliser, 2001. "Finding a Way Out of America's Demographic Dilemma," NBER Working Papers 8258, National Bureau of Economic Research, Inc.
    25. Lans Bovenberg & Thijs Knaap, 2005. "Ageing, Funded Pensions and the Dutch Economy," CESifo Working Paper Series 1403, CESifo Group Munich.
    26. Benz, Ulrich & Fetzer, Stefan, 2004. "Indicators for Measuring Fiscal Sustainability: A Comparative Application of the OECD-Method and Generational Accounting," Discussion Papers 118, Institut für Finanzwissenschaft, Albert-Ludwigs-Universität Freiburg.
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    29. Cronin, David & Daniel McCoy,, 2000. "Fiscal Sustainability When Time is on Your Side," Research Technical Papers 4/RT/00, Central Bank of Ireland.
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