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Certainty Equivalence Procedures in the Macroeconomic Planning of an Oil Economy

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Macroeconomic Prospects for a Small Oil Exporting Country

Part of the book series: International Studies in Economics and Econometrics ((ISEE,volume 11))

Abstract

The theme of this paper is how to cope with the macroeconomic exposure to risk in the Norwegian economy entailed by the increased reliance upon the extraction of petroleum resources. A framework for long-term macroeconomic planning based on optimal management of national wealth under uncertainty of future oil price and rates of return on non-oil assets is suggested, and a formal optimization model based on dynamic programming is presented. The model is solved under simplified assumptions and some properties of the solution are presented. The last part of the paper is devoted to numerical explorations in applying certainty equvalence procedures in optimizing the consumption path and capital accumulation.

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References

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Authors
  1. Iulie Aslaksen
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  2. Olav Bjerkholt
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Editor information

Editors and Affiliations

  1. Central Bureau of Statistics, P. O. Box 8131, Dep 0033, Oslo 1, Norway

    Olav Bjerkholt  & Erik Offerdal  & 

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© 1985 Martinus Nijhoff Publishers, Dordrecht

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Aslaksen, I., Bjerkholt, O. (1985). Certainty Equivalence Procedures in the Macroeconomic Planning of an Oil Economy. In: Bjerkholt, O., Offerdal, E. (eds) Macroeconomic Prospects for a Small Oil Exporting Country. International Studies in Economics and Econometrics, vol 11. Springer, Dordrecht. https://doi.org/10.1007/978-94-009-5127-3_12

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  • DOI: https://doi.org/10.1007/978-94-009-5127-3_12

  • Publisher Name: Springer, Dordrecht

  • Print ISBN: 978-94-010-8767-4

  • Online ISBN: 978-94-009-5127-3

  • eBook Packages: Springer Book Archive

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