IMF Working Papers

IMF Working Papers
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Publisher:
International Monetary Fund
ISSN:
1018-5941
The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
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Counting the Oil Money and the Elderly: Norway's Public Sector Balance Sheet

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Counting the Oil Money and the Elderly: Norway's Public Sector Balance Sheet
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Journal Issue
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Volume/Issue:
2018/190
Series:
IMF Working Papers
Author(s):
Ezequiel Cabezon, and Christian Henn
Publisher:
INTERNATIONAL MONETARY FUND
Published Date:
August 2018
DOI:
http://dx.doi.org/10.5089/9781484370117.001
ISBN:
9781484370117
ISSN:
1018-5941
Page:
55
Based on a permanent income analysis, Gagnon (2018) has prominently suggested that Norway has saved too much, thereby free-riding on the rest of the world for demand. Our public sector balance sheet analysis comes to the opposite conclusion, chiefly because it also accounts for future aging costs. Unsurprisingly, we find that Norway's current assets exceed its liabilities by some 340 percent of mainland GDP. But its nonoil fiscal deficits have grown very large (to almost 8 percent of mainland GDP) and aging pressures are only commencing. Therefore, Norway's intertemporal financial net worth (IFNW) is negative, at about -240 percent of mainland GDP. As IFNW represents an intertemporal budget constraint, this implies that Norway's savings are likely insufficient to address aging costs without additional fiscal action.
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