Oil price shock on the Norwegian mainland economy and various sectors
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- Master of Science 
In this paper, we compare the effects of two demand shocks to macroeconomic variables for the mainland economy and five different sectors of Norway, by using a Structural Vector Autoregressive (SVAR) model. The two structural shocks are identified as an aggregate demand shock and an oil-specific demand shock. Economic activity is measured in mainland and sector-specific gross domestic product (GDP), employment and real wage. One of the main findings is that the oil price shock appears to be the most important shock for mainland GDP and all sector-specific gdp. While most of the responses of employment and real wage are similar, both in magnitude and persistence. The majority of the sectors appear to have close indirect links to the petroleum industry, while other sectors seem to have little to none link to the petroleum industry. The findings also suggest a fairly stable but oil-dependent mainland economy. The key take-away is that the oil prices do have influence on the Norwegian mainland economy and the different sectors of this paper. In the latter part of our paper, we include a robustness check where we create four alternative oil price measures on a basis of the real oil price. The four alternative oil price measures are inspired by Mork (1989) and Hamilton (1996), where they look at increases and decreases of oil prices separately. We used this to evaluate the correlation between the alternative oil price measures and the real oil price. The results show that the real oil price has the highest correlation to the alternative oil price measure, related to decrease, inspired by Mork (1989). Finally, as an extension, we conduct an asymmetry test, to investigate the linearity and symmetry of mainland and sector-specific gdp, and the alternative oil price measures. The results indicate a linear relationship with the mainland GDP and most of the sector-specific gdp, and the alternative oil price measures.
Masteroppgave(MSc) in Master of Science in Business, Economics - Handelshøyskolen BI, 2023