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Europe > Norway

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Cover IMF Staff Country Reports
Norway: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Norway
International Monetary Fund. European Dept.
The 2024 Article IV Consultation discusses that boosting labor supply, containing public expenditure pressures, and raising productivity will be required for Norway to be able to continue its strong economic performance and preserve its welfare model. A recent White Paper by the Ministry of Finance rightly raises these key issues facing Norway’s economy in the longer term. Real gross domestic product growth slowed in 2023 and is expected to gradually rebound in the near term as private domestic demand strengthens supported by higher real incomes. Tight macroprudential policies should remain in place to mitigate systemic vulnerabilities. The financial system appears resilient and banking system buffers are strong. Long-term fiscal challenges should be more forcefully addressed. Norway has the largest proportion of the population on disability-related benefits among the organisation for economic co-operation and development countries, and reforming costly and distortionary social benefit systems is possibly the most important and politically difficult reform pending. Although Norway boasts one of the highest levels of labor productivity among its peers, it has slowed faster than in other countries. To reverse this trend, conditions should be improved to facilitate sectoral reallocation as well as innovation and technology adoption.
Keywords:
inflation expectation; holdings of SDR; monetary policy stance; inflation pressure; consumer price inflation; Inflation; Labor markets; Central bank policy rate; Global
Cover Selected Issues Papers
Japan’s Fertility: More Children Please
Kohei Asao
,
Danila Smirnov
, and
TengTeng Xu
Japan’s fertility has declined in the past three decades. Raising Japan’s fertility rate is a key policy priority for the government. Using cross-country analysis and case studies, this paper finds that the most successful measure to support the fertility rate is the provision of childcare facilities, particularly for children aged 0-2. Offering stronger incentives for the use of paternity leave can alleviate the burden of childcare on mothers, supporting fertility. On the other hand, there is limited evidence that cash transfers are effective in supporting fertility, based on international experience.
Keywords:
Fertility; childcare; gender; labor market; fertility growth; TengTeng xu; Japan's fertility; fertility rate; fertility rate growth; Women; Gender inequality; Gender diversity; Employment; Aging; East Asia
Cover IMF Working Papers
Dissecting the Decline in Average Hours Worked in Europe
Diva Astinova
,
Romain A Duval
,
Niels-Jakob H Hansen
,
Ben Park
,
Ippei Shibata
, and
Frederik G Toscani
Three years after the COVID-19 crisis, employment and total hours worked in Europe fully recovered, but average hours per worker did not. We analyze the decline in average hours worked across European countries and find that (i) it is not cyclical but predominantly structural, extending a long-term trend that predates COVID-19, (ii) it mainly reflects reduced hours within worker groups, not a compositional shift towards lower-hours jobs and workers, (iii) men—particularly those with young children—and youth drive this drop, (iv) declines in actual hours match declines in desired hours. Policy reforms could help involuntary parttimers and women with young children raise their actual hours towards desired levels, but the aggregate impact on average hours would be limited to 0.5 to 1.5 percent. Overall, there is scant evidence of slack at the intensive margin in European labor markets, and the trend fall in average hours worked seems unlikely to reverse.
Keywords:
hours worked; working hours; labor market; Europe; policy reform; worker level; scant evidence; summary statistics; full time worker; Labor markets; Women; Labor supply; Labor force participation
Cover IMF Staff Country Reports
Norway: 2023 Article IV Consultation-Press Release; and Staff Report
International Monetary Fund. European Dept.
The 2023 Article IV Consultation discusses that Norway grew strongly in 2022 but the pace of output growth receded somewhat this year. Record-high energy and food prices together with much higher interest rates put pressure on households’ purchasing power. Nonetheless, mainland gross domestic product growth is still expected to be positive, supported by strong business investment and exports. Norway experienced one of the highest growth rates among advanced economies last year, and risks remain balanced. Growth is continuing but at a more modest pace. The country has experienced windfall gains from high petroleum and natural gas prices that have so far countered global headwinds. The banking system is strong but tightening global conditions pose risks. Risks to financial stability appear to be broadly manageable, but continued vigilance is needed given the heightened uncertainty. Progress on structural reforms has been piecemeal. Some steps have been taken in further upskilling the workforce, including increased vocational training and the planned introduction of a youth guarantee scheme.
Keywords:
money market rate; inflation risk; liability positions vis-a-vis nonresident; inflation expectation; mainland GDP growth; Inflation; Fiscal stance; Central bank policy rate; Consumption; Labor markets; Global
Cover IMF Working Papers
Does a Wealth Tax Improve Equality of Opportunity? Evidence from Norway
Kristoffer Berg
and
Mr. Shafik Hebous
Does parental wealth inequality impact next generation labor income inequality? And does a tax on parental wealth affect the labor income distribution of the next generation? We tackle both questions empirically using detailed intergenerational data from Norway, focusing on effects on wages rather than capital income. Results suggest that a net wealth of NOK 1 million increases wages of the children by NOK 14,000. Children of wealthy parents also have a higher labor income mobility. The estimated hypothetical wage distribution without the wealth tax is more unequal. Moreover, suggestive evidence indicates parental wealth is associated with higher labor risk taking.
Keywords:
Wealth Tax; Equality of Opportunity; Parental Wealth; Income Mobility; Inequality; Redistribution; labor income dispersion; wealth tax tax rate; counterfactual income distribution; Wages; Income; Income distribution; Capital income
Cover IMF Working Papers
What are the Economic Effects of Pandemic Containment Policies? Evidence from Sweden
Mrs. Jana Bricco
,
Florian Misch
, and
Alexandra Solovyeva
This paper examines the economic effects of policies to contain Covid-19, by extracting lessons from Sweden’s experience during the ‘Great Lockdown’. Sweden’s approach was less stringent and based more on social responsibility than legal obligations compared to European peers. First, we provide an account of Sweden’s strategy and the health outcomes. Second, drawing on a range of data sources and empirical findings, our analysis of the first Covid-19 wave indicates that a less stringent strategy can soften the economic impact initially. These benefits could be eroded subsequently, due to potentially higher infection rates and a prolonged pandemic, but in Sweden’s case, the evidence remains mixed in this regard, and it is premature to judge the outcome of Sweden’s containment strategy. In addition, the economic effects of the containment strategy also depend on social behavior, demographics and structural features of the economy, such as the degree of export orientation, reliance on global supply chains, and malleability to remote working.
Keywords:
WP; Sweden; containment; containment measure; IMF staff calculation; containment strategy
Cover IMF Working Papers
Public Sector Balance Sheet Database: Overview and Guide for Compilers and Users
Mr. Miguel A Alves
,
Mrs. Sage De Clerck
, and
Juliana Gamboa-Arbelaez
This paper provides an overview of the Public Sector Balance Sheet (PSBS) Database, a dataset developed in the context of the October 2018 Fiscal Monitor. The dataset provides a comprehensive picture of public wealth for 38 countries, and a narrower picture for further 37 countries and territories. Comprehensive PSBSs bring together all the accumulated assets and liabilities that governments control, including public corporations, natural resources, and pension liabilities. They therefore account for the entirety of what the state owns and owes, offering a broader fiscal picture beyond debt and deficits. This is particularly relevant in the current context of record and still rising debts and heightened risks to the balance sheet of the public sector. PSBSs bring about greater transparency and allow closer scrutiny of government’s financial position. They also allow better balance sheet management, thereby potentially increasing return on assets, reducing risks and the costs of borrowing, and improving fiscal policymaking. The paper also elaborates on the conceptual framework and methodology used in compiling the data, and provides some practical guidelines on the compilation, validation, and dissemination of such data.
Keywords:
WP; accounts payable; PSBS database; low income; return on assets; accounts receivable; fair value; investment fund; net present value; capital stock; central bank; Financial statements; Public sector; Business enterprises; Pensions; Pension spending; Global; Assets; balance sheet; converting financial statements; liabilities; mineral and energy resources; net worth; public corporations; public sector balance sheet; public wealth; government asset; historical cost; book value; reserve account; deposit assets; heritage assets
Cover IMF Working Papers
Wage Growth and Inflation in Europe: A Puzzle?
Vizhdan Boranova
,
Raju Huidrom
,
Sylwia Nowak
,
Petia Topalova
,
Mr. Volodymyr Tulin
, and
Mr. Richard Varghese
Wages have been rising faster than productivity in many European countries for the past few years, yet signs of underlying consumer price pressures remain limited. To shed light on this puzzle, this paper examines the historical link between wage growth and inflation in Europe and factors that influence the strength of the passthrough from labor costs to prices. Historically, wage growth has led to higher inflation, but the impact has weakened since 2009. Empirical analysis suggests that the passthrough from wage growth to inflation is significantly lower in periods of subdued inflation and inflation expectations, greater competitive pressures, and robust corporate profitability. Thus the recent pickup in wage growth is likely to have a more muted impact on inflation than in the past.
Keywords:
WP; wage growth; inflation expectation; Wages; inflation; passthrough; Europe; Passthrough ratio; wage-inflation passthrough; firms' profitability; Labor costs; Producer prices; Wage adjustments; Global
Cover IMF Working Papers
Reducing and Redistributing Unpaid Work: Stronger Policies to Support Gender Equality
Cristian Alonso
,
Mariya Brussevich
,
Ms. Era Dabla-Norris
,
Yuko Kinoshita
, and
Ms. Kalpana Kochhar
Unpaid work, such as caring for children, the elderly, and household chores represents a significant share of economic activity but is not counted as part of GDP. Women disproportionately shoulder the burden of unpaid work: on average, women do two more hours of unpaid work per day than men, with large differences across countries. While much unpaid care work is done entirely by choice, constraints imposed by cultural norms, labor market features or lack of public services, infrastructure, and family-friendly policies matter. This undermines female labor force participation and lowers economy-wide productivity. In this paper, we examine recent trends in unpaid work around the world using aggregate and individual-level data, explore potential drivers, and identify policies that can help reduce and redistribute unpaid work across genders. Conservative model-based estimates suggest that the gains from these policies could amount to up to 4 percent of GDP.
Keywords:
WP; unpaid work; Female Labor Force Participation; Gender Equality; care work; employment status; work arrangement; job matching; Women; Gender diversity; Gender inequality; Labor markets; Global; Africa
Cover IMF Staff Country Reports
Norway: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Norway
International Monetary Fund. European Dept.
While many advanced economies are experiencing slower growth, Norway’s output has continued to expand strongly, helped by a robust labor market, positive terms of trade, and some competitiveness gains. Core inflation has picked up to close to 2¼ percent. Residential house price growth has softened significantly but prices remain overvalued, and household debt continues to rise. Commercial real estate risks are also intensifying and combine with mounting external risks to cloud the outlook. The Christian Democrats have recently joined Prime Minister Solberg’s governing coalition, which now enjoys a majority in parliament.
Keywords:
ISCR; CR; rate; authority; debt; fiscal policy; liability positions vis-à-vis nonresident; mainland GDP; household debt-sustainability; exchange arrangement; further rate hike; property price growth; monetary policy normalization; expenditure saving; core inflation; Housing prices; Anti-money laundering and combating the financing of terrorism (AML/CFT); Inflation; Labor markets; Employment; Global; Baltics; transparency policy; article IV of the IMF's article; money market rate