This document describes NORA, a microfounded model for fiscal policy analysis in Norway. The model is based on relatively standard dynamic stochastic general equilibrium (DSGE) models of the type used in many central banks and international policy institutions. The standard framework is however modified considerably to allow for a realistic analysis of the general equilibrium effects of fiscal policy on the Norwegian economy. In particular, the model features wage bargaining between a union representing workers and firms in the tradeable sector to capture the institutional framework for wage setting in Norway, a sovereign wealth fund—the Government Pension Fund Global (GPFG)—and related constraints on the use of resources from the GPFG for fiscal financing purposes, and a rich description of the fiscal authority in Norway and its links with the rest of the economy. The model parameters are determined partly through a calibration of the model’s steady state to long-run averages in the data and partly through Bayesian estimation using quarterly time series for the Norwegian economy for the period 1999Q1 to 2019Q4. We illustrate the properties of the model by showing how it responds to some common macroeconomic shocks, by presenting a number of fiscal policy simulations that illustrate typical use cases, and by comparing fiscal multipliers with those from existing models.
NORA — A Microfounded Model for Fiscal Policy Analysis in Norway
NORA is one of the economic models in the portfolio of models maintained by the Research Department at Statistics Norway. The model aims to capture features of the Norwegian economy to aid in the analysis of fiscal policy in Norway.
Notater 2024/4
Publisert: 17. januar 2024
ISBN (elektronisk):978-82-587-1895-3
ISBN (elektronisk):978-82-587-1895-3