OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

English, French

Enhancing the Effectiveness of Public Spending in Norway

Public spending is very high in Norway, partly reflecting an extensive coverage of the welfare system and ambitious regional development objectives. Moreover, several institutional features contribute to dampening the cost-effectiveness of many public-spending programmes. Abundant oil revenues have so far mitigated strains on public finance. However, coping with the depletion of oil resources and the fiscal consequences of ageing would require to increase the cost-effectiveness of many public spending programmes, while leaving some room to cut the high tax-to-GDP ratio. This paper identifies the main sources of inefficiencies and suggests policy options. These include: supplementing the existing deficit rule by an expenditure rule; increasing flexibility in public sector wages and job tenure; reforming the funding system of local governments; raising the contestability of public service provision; intensifying the use of price signals and improving incentives to reduce the ...


Keywords: fiscal policy, public sector efficiency, public expenditure, fiscal federalism, Norway, public management, budget systems
JEL: D61: Microeconomics / Welfare Economics / Allocative Efficiency; Cost-Benefit Analysis; H11: Public Economics / Structure and Scope of Government / Structure, Scope, and Performance of Government; H40: Public Economics / Publicly Provided Goods / Publicly Provided Goods: General; E62: Macroeconomics and Monetary Economics / Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook / Fiscal Policy; H61: Public Economics / National Budget, Deficit, and Debt / Budget; Budget Systems
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