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Long-term fiscal effects of public pension reform in Norway: A generational accounting analysis

Author

Listed:
  • Hagist, Christian
  • Raffelhüschen, Bernd
  • Risa, Alf Erling
  • Vårdal, Erling
Abstract
Generational Accounts (GAs) measure the fiscal sustainability of the public sector. We ask whether the contributions from the Government Pension Fund and remaining oil and gas wealth in the ground, together with the pension reform taking effect in 2011, are sufficiently large to secure generational balance in Norway. Our results show that the pension reform has a substantial effect, and contributes as much to generational balance as the total petroleum wealth. Neither increased economic growth per se nor increased fertility contribute to improve the GAs. The structural characteristics of higher employment and lower transfer payments typical for cyclical upturns, improve the GAs substantially. Optimistic assumptions regarding these structural characteristics do not remove the need for further reforms to obtain fiscal sustainability of the Norwegian public sector.

Suggested Citation

  • Hagist, Christian & Raffelhüschen, Bernd & Risa, Alf Erling & Vårdal, Erling, 2011. "Long-term fiscal effects of public pension reform in Norway: A generational accounting analysis," FZG Discussion Papers 49, University of Freiburg, Research Center for Generational Contracts (FZG).
    • Handle: RePEc:zbw:fzgdps:49
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    References listed on IDEAS

    as
    1. Alan J. Auerbach & Jagadeesh Gokhale & Laurence J. Kotlikoff, 1991. "Generational Accounts: A Meaningful Alternative to Deficit Accounting," NBER Chapters, in: Tax Policy and the Economy, Volume 5, pages 55-110, National Bureau of Economic Research, Inc.
    2. Auerbach, A.J. & Gokhale, J. & Kotlikoff, L.J. & Steigum, E.Jr., 1993. "Generational Accounting in Norway: Is Norway Overconsuming its Petroleum Wealth?," Papers 06-93, Norwegian School of Economics and Business Administration-.
    3. Alan J. Auerbach & Jagadeesh Gokhale & Laurence J. Kotlikoff, 1992. "Social Security and Medicare Policy from the Perspective of Generational Accounting," NBER Chapters, in: Tax Policy and the Economy, Volume 6, pages 129-145, National Bureau of Economic Research, Inc.
    4. Carl E. Gjersem, 2002. "A presentation of Generational Accounting in Norway," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 28, pages 61-73.
    5. Erling Holmøy & Kyrre Stensnes, 2008. "Will the Norwegian pension reform reach its goals? An integrated micro-macro assessment," Discussion Papers 557, Statistics Norway, Research Department.
    6. Alan J. Auerbach & Jagadeesh Gokhale & Laurence J. Kotlikoff & Erling Steigum, 1993. "Generational accounting in Norway: is the nation overconsuming its petroleum wealth?," Working Papers (Old Series) 9305, Federal Reserve Bank of Cleveland.
    7. Ulrich Benz & Stefan Fetzer, 2006. "Indicators for Measuring Fiscal Sustainability: A Comparison of the OECD Method and Generational Accounting," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 62(3), pages 367-391, September.
    8. Alan J. Auerbach & Jagadeesh Gokhale & Laurence J. Kotlikoff, 1994. "Generational Accounting: A Meaningful Way to Evaluate Fiscal Policy," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 73-94, Winter.
    9. Marit Rønsen, 2004. "Fertility and family policy in Norway - A reflection on trends and possible connections," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 10(10), pages 265-286.
    10. Erling Steigum, Jr & Carl Gjersem & Willi Leibfritz, 1999. "Generational Accounting and Depletable Natural Resources: The Case of Norway," NBER Chapters, in: Generational Accounting around the World, pages 369-396, National Bureau of Economic Research, Inc.
    11. Alan J. Auerbach & Laurence J. Kotlikoff & Willi Leibfritz, 1999. "Generational Accounting around the World," NBER Books, National Bureau of Economic Research, Inc, number auer99-1, February.
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Public pensions are not sustainable, even in Norway
      by Economic Logician in Economic Logic on 2011-07-19 19:58:00

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    More about this item

    Keywords

    Generational Accounting; Norway; Fiscal Policy; Intergenerational redistribution;
    All these keywords.

    JEL classification:

    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General

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