Conference: The impact of fiscal policy on the economy

Fiscal policy affects the economy through several channels, with varying time lags. In the short run, it can impact the level of activity in the economy by changing aggregate demand for goods and services. This means that fiscal policy can play a role in stabilizing economic fluctuations.

In the medium run, fiscal policy will also influence the structure of the economy, as well as the relative sizes of the exposed and sheltered sectors. Thus it will affect the economy’s ability to handle structural adjustments, such as the petroleum sector’s declining importance for the Norwegian economy.

Fiscal policy may also have an impact on long-term economic growth. Of major importance is the design of the tax and transfers system, which will affect the supply of labor and capital. Other parts of the budget also play a role.

The effects of fiscal policy are complex, and policymakers have to balance a range of considerations. With this conference, the Panel hopes to contribute to the public debate on fiscal policy – how we analyze its impact on the economy, and what we can hope to achieve with it.

Agenda

11.30   Registration, coffee and sandwiches

12.00   Welcome
            Prof. Steinar Holden, chair of the Panel
            Opening
            Siv Jensen, Minister of Finance

12.15   «How does fiscal policy affect the economy?»
            Vítor Gaspar, Director, Fiscal Affairs Department, IMF

            Prepared comment:

            Prof. Øystein Thøgersen, NHH

13.10   Coffee break

13.30   «Stabilizing the economy – what is the role of fiscal policy?»
            Prof. Giancarlo Corsetti, University of Cambridge
            Prepared comment:
            Prof. Hilde Bjørnland, BI

14.20   Coffee break

14.40   «How does fiscal policy affect the Norwegian economy?»
            Prof. Ragnar Torvik, NTNU
            Prepared comment:
            Vítor Gaspar, Director, Fiscal Affairs Department, IMF

15.20   Concluding remarks
            Prof. Steinar Holden, chair of the Panel

15.45   End

The conference will take place in The Government quarter, auditorium in building R5, Oslo. The
conference programme is available here. The conference is open to the public. Registration by e-mail to fmv@fin.dep.no before Friday 9th December.

More informations about The Ministry of Finance’s advisory panel on macroeconomic models and methods is available here.