Oil Revenues and the Norwegian Economy in the Seventies

Abstract

This paper is concerned with the counterfactual question of how the Norwegian economy might have performed in the 1970’s if there had been no prospects of oil and gas in the North Sea. A small macroeconomic model is used to shed light on the following issues:

• a) what would have been the macroeconomic impacts on the economy if no investments and production in the oil sector had taken place since the late 1960’s given that economic policy remained unchanged?

• b) As a result of the problems that would have developedin the situation a), what kind of economic policy might