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Prepared by Thomas Dowling and Kazuko Shirono (both EUR).
The correlation between net migration and oil prices during 1990-2012 was about 0.9.
Potential GDP of the mainland economy is more relevant for policy considerations in Norway. Monetary policy is assessed based on mainland economic activity, among other factors, and Norway’s fiscal impulse is measured in terms of a change in non-oil deficit as a share of potential mainland GDP. Thus this paper focuses on potential output of the mainland economy.
The OECD’s estimates are based on a production function approach (Girono and others, 1995). Norges Bank’s output gap assessment entails trend calculations of the mainland GDP, adjusted for various key factors including unemployment, capacity utilization and labor force participation. See Sturød and Hagelund (2012) for more detailed discussions on these factors.