Norway goes Keynesian January 26, 2009
Posted by Sverre in : Norwegian politics, Political economy , comments closed
The 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…)