Bibliographic Details
| Title: |
Climate risk, petroleum resources and the Norwegian real exchange rate. |
| Authors: |
Akram, Q. Farooq farooq.akram@norges-bank.no |
| Source: |
Norges Bank: Staff Memo. 6/6/2025, p1-28. 28p. |
| Subject Terms: |
*FOREIGN exchange rates, *PETROLEUM sales & prices, *PETROLEUM production, *SOVEREIGN wealth funds, *COST benefit analysis, PETROLEUM reserves, CLIMATE change |
| Abstract: |
We investigate possible effects on the Norwegian equilibrium real exchange rate of hypothetical restrictions on the extraction of petroleum resources motivated by climate goals. In our analytical framework, the equilibrium real exchange rate is affected by the permanent income from net foreign assets, including the Government Pension Fund Global (GPFG) and the present value of available petroleum resources. Our empirical analysis suggests that extraction restrictions may contribute only to a modest depreciation of the equilibrium real exchange rate. The depreciation increases with the scope of extraction restrictions but may be partly offet by a potential rise in petroleum prices resulting from these restrictions. If the real rate of return on the GPFG is higher than that on petroleum resources, a faster pace of extraction and transfer of petroleum revenues to the GPFG may also reduce exchange rate depreciation. [ABSTRACT FROM AUTHOR] |
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| Database: |
Business Source Index |
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