.  In the 1960s, Norway lagged behind its Scandinavian neighbors in the aggregate value of economic production per capita, as it had for decades. By the 1990s, Norway had caught up with and forged ahead of Denmark and Sweden. When and why did Norway catch up? The discovery and extraction of oil in the early 1970s is usually suggested as the explanation. But oil alone cannot explain Norway’s growth, since Sachs and Warner (2001) show that resource gifts often reverse growth, making oil a curse, not a blessing. Moreover, there is the possibility of contracting the Dutch Disease, which involves a rapid and substantial contraction of the traded goods sector. This article explains how deliberate macroeconomic policy, the arrangement of political and economic institutions, a strong judicial system, and social norms contributed to let Norway escape the Resource Curse and the Dutch Disease for more than two decades. Intriguingly, it appears that Norway in the late 1990s may show some symptoms: Norway has experienced reversed relative growth compared to Denmark and Sweden and a contraction of industrial activity. This article explores the political economy behind this recent slowdown.

Semi-parametric Engel curves are used to infer bias in the Canadian CPI as a Cost of Living Index. The budget share of food has long been used as an indicator of welfare. We compare households with the same levels of CPI deflated total expenditure over the period 1978-2000. Differences in the expenditure share of food are attributed to the CPI failing to capture changes in wealth. We employ a novel econometric approach using a single index penalized linear spline model. We find that the CPI overstated changes in the cost of living by an average of 1.81% and 0.785% for single and two adult households respectively. JEL Classification Codes D1, C1

Abstract:Growth studies show, counter to intuition, that the discovery of a natural resource may be a curse rather than a blessing since resource-rich countries grow slower than others. But it has been suggested that Norway may be an important exception to the curse and that the curse does not afflict rich countries. This article addresses both issues, and introduces a new diagnostic test. Neighbor countries Denmark and Sweden are used to highlight Norway's relative development and to test for curse presence. I employ a structural break technique to demonstrate that Norway started an acceleration in the early 70s, after having discovered oil in 1969, and did not experience a pronounced retardation for the next 25 years. Instead, after first catching-up with its neighbors, Norway maintained a higher pace of growth. Norway might have escaped the curse. However, data suggest a slow-down at the end of the period, opening the possibility of a late onset of the curse. If so, rich countries are not immune.

Indirect taxes on transportation activities that pollute can correct externalities and close the gaps between private and social costs. However, policy makers often find such Pigou taxes difficult to implement because of political resistance due to possibly adverse affects on equity. For this reason it is important to assess the distributional aspects of environmental levies. This article estimates properties of the demand for transportation in parametric and non-parametric analyses of Consumer Expenditure Surveys for the United States, 2000, and finds patterns in the resulting set of Engel curves. Private transportation using air flights and new automobiles have Engel elasticities above unity while public transportation via mass transit has Engel elasticity below unity. The findings can be interpreted in an important way since they show that a differentiated scheme of environmental taxes on transportation may function progressively. A Pigou scheme with larger taxes on modes of transportation that pollute more appears to coincide with larger levies on luxury modes preferred by richer households.