New research: Resource revenue management and wealth neutrality in Norway

Klaus Mohn ([uis.no], University of Stavanger) writes on

Resource revenue management and wealth neutrality in Norway

Abstract:

An important idea behind the Norwegian oil fund mechanism and the fiscal spending rule is to protect the non-oil economy from the adverse effects of excessive spending of resource revenues over the Government budget. A critical assumption in this respect is that public sector saving is not being offset by private sector dissaving, which is at stake with the hypothesis of Ricardian equivalence. Based on a framework of co-integrating saving rates, this model provides an empirical test of the Ricardian equivalence hypothesis on Norwegian time series data. Although the model rejects the strong-form presence of Ricardian equivalence, results indicate that the Norwegian approach does not fully succeed in separating spending of resource revenues from the accrual of the same revenues.

Published in Energy Policy, Volume 96, September 2016, Pages 446–457, find here [sciencedirect.com]