Abstract
The Norwegian government gets a substantial income from oil and gas extraction, both through taxes and partnerships with oil companies. In recent years (2009–2011), this has amounted to about 25% of government revenues. The Norwegian parliament has endorsed a savings guideline aimed at preserving petroleum wealth. Actual savings of petroleum revenues are compared with what this guideline stipulates, and the guideline itself is compared to the Hicksian permanent income rule for wealth preservation. While the Norwegian savings policy has been successful from a macroeconomic perspective it has been less so from a microeconomic perspective. Over the last 15 years expenditure on disability and sick leave has increased rapidly while expenditure on transportation infrastructure has stagnated. These trends are compared with the trends in similar expenditures in Sweden and Denmark. On the basis of the Norwegian experience, I discuss to what extent institutional design can guard against misinformation or misaligned incentives and to what extent the Norwegian petroleum fund design could be useful for underdeveloped but resource rich countries.
