Counting the Oil Money and the Elderly [electronic resource] : Norway's Public Sector Balance Sheet / Ezequiel Cabezon.
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TextSeries: IMF Working Papers; Working Paper ; No. 18/190Publication details: Washington, D.C. : International Monetary Fund, 2018Description: 1 online resource (55 p.)ISBN: 1484370112 :Subject(s): Debt Management | General | Social Security And Public Pensions | State And Local Government: HealthAdditional physical formats: Print Version:: Counting the Oil Money and the Elderly: Norway's Public Sector Balance SheetOnline resources: IMF e-Library | IMF Book Store Abstract: 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.
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.
Description based on print version record.
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