| This dissertation project involves the construction and application of a large-scale simulation model designed to assess the effects of various oil extraction rate and public sector expenditure policies on the Norwegian economy. The simulation model differs from most other applied general equilibrium models in its treatment of the interactions between the domestic and the world economy.;The model represents the taxation, expenditure and production roles of the government in detail. Particular attention is given to the specification of oil production, incorporating characteristic features such as pure rents, and the long lead times of investments in this sector. Foreign trade in goods as well as capital flows are modelled, and particular attention is given to Norway's foreign debt and investments.;With this structure the model simulates the effects of various policies on the economy for the year 1979-2000. It examines quantitatively the effects of following different depletion paths for oil and gas resources; different foreign investment policies and different public sector expenditure patterns. The model is also used to evaluate the strengths of different kinds of mechanisms that might lead to deindustrialization as an outcome of the oil induced boom.;The economic equilibria described the model result from the interactions of consumers, producers, the government and the foreign sectors. The model identifies 4 domestic households according to factor endowments, and determines the demand behavior of each group according to a non-homoethetic expenditure system. The 10 consumption goods in the model are classified into necessities, luxuries and "neutral" goods. The model divides Norwegian industries into 35 sectors, of which 4 produce "energy" goods, 5 publicly consumed goods, and the remaining 26 produce non-energy "private" goods. Furthermore, 6 types of non-competing import goods brings to 41 the number of producer goods identified in the model. Goods range from non-tradables such as construction and housing services to "extreme" tradables such as crude oil and natural gas, as well as the non-competing imports. Import and export market shares are endogenously determined by the use of composite goods in final and intermediate demands. |
