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Counting the Oil Money and the Elderly: Norway's Public Sector Balance Sheet

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  • Ezequiel Cabezon
  • Christian Henn

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.

Suggested Citation

  • Ezequiel Cabezon & Christian Henn, 2018. "Counting the Oil Money and the Elderly: Norway's Public Sector Balance Sheet," IMF Working Papers 2018/190, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2018/190
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    References listed on IDEAS

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    Cited by:

    1. Basu, Rahul, 2020. "Intergenerational Equity, the Public Trust Doctrine, Norway and North Sea Oil," MPRA Paper 102856, University Library of Munich, Germany.

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