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The crisis game – poker or chicken? February 1, 2009

Posted by Sverre in : Norwegian politics, Political economy , add a comment

Norwegian newspaper Aftenposten had an interesting report before the weekend about the games surrounding the Norwegian government relief packages. They compare the gamchickene now played between the government and the banks. On one side of the table we have Prime Minister Jens Stoltenberg (Labour), and on the other we have the major bank managers, represented by Nordea CEO Gunn Wærsted. Each has three visible cards: a 7, Jack and Ace. The analogy might not be brilliant and ingenious, but it describes the game in a simillar manner to the game theories of Political Economy. (more…)

Norway goes Keynesian January 26, 2009

Posted by Sverre in : Norwegian politics, Political economy , 1 comment so far

keyneshalvorsenThe ongoing finance crisis has certainly given classic Keynesianism a new boost. And few countries have embraced this as clearly as Norway did today. The center-left government under Prime Minister Jens Stoltenberg from Labour (Arbeiderpartiet) and Finance Minister Kristin Halvorsen from the Socialist Left Party (Sosialistisk Venstreparti) introduced a massive expansion package aimed at combating unemployment.

The package expands the national budget directly with about 2o billion NOK (roughly 2.2 billion € or 2.86 b$), with nearly 17 billions increased expenditure and over 3 billion worth of tax cuts. With secondary effects, the government estimates a total expansive effect of 27 billion NOK, reducing the substantial oil-boosted government surplus. When correcting for petroleum-based offshore income, the government now estimates a government deficit of 119 billion NOK for 2009. This sums up to an expansion of the oil-corrected government budget of 2.3%, substantially higher than the 1.5% goal set by the EU. (more…)