Is Norway's Bird-in-Hand Stabilization Fund Prudent Enough? Fiscal Reactions to Hydrocarbon Windfalls and Graying Populations
We estimate fiscal reaction functions for non-hydrocarbon tax and public spending shares of national income and for debt management strategies adopted by Norway and compare these with rules that would prevail under the permanent income hypothesis and bird-in-hand rule. We conclude that the fiscal reaction functions adopted by Norway have to some extent been forward-looking when it comes to the rising pension bill, but backward-looking when it comes to hydrocarbon revenues. Still, our results suggest that the imminent costs of a rapidly graying population are not sufficiently taken into account in the current fiscal rules, since Norway is on a trajectory of turning a current net asset-GDP-ratio close to one into a net debt-GDP-ratio of two in 2060. Something needs to give in the holy trinity: either the rules of the Stabilization fund have to be tightened, or civil servant salaries, benefits and pensions will no longer have to be fully indexed to market wages, or the retirement age has to be increased.
|Date of creation:||2009|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Web page: http://www.cesifo.deEmail:
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Laibson, David I., 1997.
"Golden Eggs and Hyperbolic Discounting,"
4481499, Harvard University Department of Economics.
- John Thornton & Fabian Bornhorst & Sanjeev Gupta, 2008. "Natural Resource Endowments, Governance, and the Domestic Revenueeffort; Evidence From a Panel of Countries," IMF Working Papers 08/170, International Monetary Fund.
- Chhaochharia, Vidhi & Laeven, Luc, 2008. "Sovereign Wealth Funds: Their Investment Strategies and Performance," CEPR Discussion Papers 6959, C.E.P.R. Discussion Papers.
- Frederick van der Ploeg, 2009.
"Aggressive Oil Extraction and Precautionary Saving: Coping with Volatility,"
OxCarre Working Papers
021, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
- van der Ploeg, Frederick, 2010. "Aggressive oil extraction and precautionary saving: Coping with volatility," Journal of Public Economics, Elsevier, vol. 94(5-6), pages 421-433, June.
- Frederick Van der Ploeg, 2010. "Aggressive Oil Extraction and Precautionary Saving: Coping with Volatility," CESifo Working Paper Series 3038, CESifo Group Munich.
- Rick Van der Ploeg & Tony Venables, 2011.
"Harnessing windfall revenues: Optimal policies for resource-rich developing economies,"
Economics Series Working Papers
543, University of Oxford, Department of Economics.
- Frederick van der Ploeg & Anthony J. Venables, 2011. "Harnessing Windfall Revenues: Optimal Policies for Resource‐Rich Developing Economies," Economic Journal, Royal Economic Society, vol. 121(551), pages 1-30, March.
- Frederick Van der Ploeg & Anthony J. Venables, 2009. "Harnessing Windfall Revenues: Optimal Policies for Resource-Rich Developing Economies," CESifo Working Paper Series 2571, CESifo Group Munich.
- Stephen Zeldes, .
"Optimal Consumption with Stochastic Income: Deviations from Certainty Equivalence,"
Rodney L. White Center for Financial Research Working Papers
20-86, Wharton School Rodney L. White Center for Financial Research.
- Zeldes, Stephen P, 1989. "Optimal Consumption with Stochastic Income: Deviations from Certainty Equivalence," The Quarterly Journal of Economics, MIT Press, vol. 104(2), pages 275-98, May.
- Paul Collier & Frederick van der Ploeg & Michael Spence & Anthony J Venables, 2009.
"Managing Resource Revenues in Developing Economies,"
OxCarre Working Papers
015, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
- Paul Collier & Rick Van Der Ploeg & Michael Spence & Anthony J Venables, 2010. "Managing Resource Revenues in Developing Economies," IMF Staff Papers, Palgrave Macmillan, vol. 57(1), pages 84-118, April.
- Mauricio Villafuerte & Rolando Ossowski & Theo Thomas & Paulo A. Medas, 2008. "Managing the Oil Revenue Boom; The Role of Fiscal Institutions," IMF Occasional Papers 260, International Monetary Fund.
- Jan-Peter Olters, 2007. "Old Curses, New Approaches? Fiscal Benchmarks for Oil-Producing Countries in Sub-Saharan Africa," IMF Working Papers 07/107, International Monetary Fund.
- Daniel Leigh & Etibar Jafarov, 2007. "Alternative Fiscal Rules for Norway," IMF Working Papers 07/241, International Monetary Fund.
- H. Takizawa & E. H. Gardner & Kenichi Ueda, 2004. "Are Developing Countries Better off Spending their Oil Wealth Upfront?," IMF Working Papers 04/141, International Monetary Fund.
- Barro, Robert J., 1979.
"On the Determination of the Public Debt,"
3451400, Harvard University Department of Economics.
- James D. Hamilton, 2008.
"Understanding Crude Oil Prices,"
NBER Working Papers
14492, National Bureau of Economic Research, Inc.
- Sibley, David S., 1975. "Permanent and transitory income effects in a model of optimal consumption with wage income uncertainty," Journal of Economic Theory, Elsevier, vol. 11(1), pages 68-82, August.
- Christa N. Brunnschweiler & Erwin H. Bulte, 2006.
"The Resource Curse Revisited and Revised: A Tale of Paradoxes and Red Herrings,"
CER-ETH Economics working paper series
06/61, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
- Brunnschweiler, Christa N. & Bulte, Erwin H., 2008. "The resource curse revisited and revised: A tale of paradoxes and red herrings," Journal of Environmental Economics and Management, Elsevier, vol. 55(3), pages 248-264, May.
- Paulo A. Medas & Daria Zakharova, 2009. "A Primeron Fiscal Analysis in Oil-Producing Countries," IMF Working Papers 09/56, International Monetary Fund.
- Jan-Peter Olters & Daniel Leigh, 2006. "Natural-Resource Depletion, Habit Formation, and Sustainable Fiscal Policy; Lessons From Gabon," IMF Working Papers 06/193, International Monetary Fund.
When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_2830. See general 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: (Julio Saavedra)
If references are entirely missing, you can add them using this form.