To manage the volatility of commodity prices, resource-rich countries are typically advised to adopt a fiscal policy framework that can be operated counter-cyclically. Drawing on Norway’s experience, this column explains that a fiscal spending rule will not necessarily shelter the economy: if the constructed rule is too lax over the commodity price cycle, fiscal policy may even exacerbate the business cycle.
Hilde C. BjørnlandProfessor of Economics at the BI Norwegian Business School.
Hilde C. Bjørnland is a Professor of Economics at the BI Norwegian Business School. She holds a Master of Science in Econometrics and Mathematical Economics from London School of Economics, and a PhD (Dr.Polit) in Economics from the University of Oslo. Her main area of research is within applied macroeconomics and time series. Special interests include the study of natural resources, business cycles, and monetary and fiscal policy