1. The other side of the coin: The downside of Norway’s savings of petroleum rents Rögnvaldur Hannesson Norwegian School of Economics

2. Background Oil discovered in Norway in 1969 by Phillips Petroleum of Oklahoma Events in 1973-74 made North Sea oil highly profitable High taxes on oil from 1975 Petroleum savings fund 1990, first deposit 1996 2

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4. Three savings rules R - rW total (Hicks’ permanent income) R - (r-g)W total (Hicks’ rule per capita) R - rW fund (Norwegian savings rule; r = 4%) W fund < W total 4

5. 5 r = 4% g = 0.9%

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7. 7 Transport 2 = Central government Transport 1 = All expenditure

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9. Three questions/conclusions How much can cleverly designed institutions achieve? Difficult to separate use of oil money from general economic/political perceptions Is the Norwegian experience anything for poor countries to emulate? 9