Norway’s experience of and response to the coronavirus

The first work package focuses on the aggregate effects of the shocks and policies that affected the Norwegian economy in the spring of 2020. This includes large movements in the oil price and the exchange rate, and the policy of shutting down certain sectors. A second goal is to a provide a macroeconomic model of the economy’s response to these shocks. Such a model can isolate the effects of different shocks and can be used to contrast Norway’s experience during the pandemic with other crises the country has gone through. Comparisons will also be made with the experiences of Sweden and Denmark.

The second work package studies the distributional consequences of the pandemic and the policies that were implemented in response. The effects were unevenly distributed as some sectors were completely shut down while others could transition to working from home. It is important to understand how households at different points of the income distribution responded to these changes. The project will study the implications of the different responses for the overall economy using a modern macroeconomic model with heterogeneous agents.

The third work package provides a cost-benefit analysis of the different policies that were adopted across countries. The policies involved different trade-offs between economic costs and health benefits. Through a cost-benefit analysis of the strategies to fight the coronavirus, policy makers can learn more about the trade-offs involved. This will be a crucial input into an assessment of the choices made in Norway, and in the preparation for dealing with pandemics in the future.

Funder: Norwegian research council (project number 326419)

Project period: 2021-2026