Did Norway Gain from the 1979-85 Oil Price Shock?

Arbeitspapier

Macroeconomic effects of the high oil prices in the period 1979-85 for the Norwegian economy are considered. An alternative low oil price scenario is developed and effects of the oil shock are calculated as the deviation between actual history and the counterfactual base. International effects based on a world model are fed into a domestic model to analyse consequences for the Norwegian economy. Without imposing any changes in fiscal policies, negative effects from lower foreign demand and higher interest rates are dominating. However, as a major oil exporting country, we argue that the high oil prices spurred a substantial increase in Norwegian public spending. Effects of a more expansionary fiscal policy, based on a relatively conservative spending strategy, are shown to more than outweigh the negative initial impact on GDP. Possible outcomes for the business cycle development are also studied

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Discussion Papers ; No. 210

Classification and Topics

• Classification: Wirtschaft ; Energy and the Macroeconomy ; Prices, Business Fluctuations, and Cycles: Forecasting and Simulation: Models and Applications ; Policy Objectives; Policy Designs and Consistency; Policy Coordination
• Subject: Oil price shocks ; Macro-econometric models ; Fiscal policy

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Eika, Torbjørn ; Magnussen, Knut A.
• Event: Veröffentlichung
• (who): Statistics Norway, Research Department
• (where): Oslo
• (when): 1998

Further information

• Handle: http://hdl.handle.net/10419/192194
• Last update: 10.03.2025, 11:44 AM CET