A Small Econometric-Model of Norway

Abstract

This paper presents a small model of the Norwegian economy which has been developed by the Division of Engineering Cybernetics at the Norwegian Institute of Technology. It was primarily designed to perform ex-post simulations of the overall behaviour of the economy during the period 1968 77. The experiments show that a cut in central government income taxes might have strengthened the economy significantly without increasing inflation. They thus indicate that a high level of personal income taxation, as in Norway today, may be highly inflationary, as opposed to what is asserted in many textbooks.

Keywords

• Econometrics
• mathematical modelling
• identification