Alternative Fiscal Rules for Norway

32 Pages Posted: 25 Jan 2008

See all articles by Etibar Jafarov

Etibar Jafarov

International Monetary Fund - European Department

Daniel Leigh

International Monetary Fund (IMF)

Date Written: October 2007

Abstract

This paper considers long-term fiscal policy options in Norway, the world's fifth largest oil exporter, in light of the substantial expected increase in pension outlays. It compares the current fiscal rule, which targets a (central government structural) non-oil deficit equal to 4 percent of Government Pension Fund assets, with three alternatives that save a larger share of oil revenue and accumulate more assets to pay for aging costs. It also analyzes the macroeconomic consequences of accumulating more assets, finding that the additional income generated from more assets allows lower tax rates, with positive effects on long-term output.

Keywords: Working Paper, Fiscal policy, Norway, Oil revenues, Pensions

Suggested Citation

Jafarov, Etibar and Leigh, Daniel, Alternative Fiscal Rules for Norway (October 2007). IMF Working Papers, Vol. , pp. 1-30, 2007. Available at SSRN: https://ssrn.com/abstract=1087158

Etibar Jafarov

International Monetary Fund - European Department ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Daniel Leigh

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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