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Counting the Oil Money and the Elderly: Norway's Public Sector Balance Sheet
Author:
Ezequiel Cabezon null

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Christian Henn
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Series:
IMF Working Papers
Volume/Issue:
Volume 2018: Issue 190
Language:
English
Publication Date:
27 Aug 2018
DOI:
https://doi.org/10.5089/9781484370117.001
ISBN:
9781484370117
ISSN:
1018-5941
Pages:
55
Keywords:
WP; mainland GDP; oil price; GPFG asset; asset price; asset stock; Public Sector Balance Sheet; Intertemporal Fiscal Balances; Debt Sustainability; Norway; statistics Norway; Norwegian krone; Norway's intertemporal financial net worth; Intertemporal public sector balance sheet; Norway's assets; Norway's IFNW; nonfinancial assets; GPFG consist; price development; Financial statements; Oil prices; Asset prices; Aging; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund