An increase in unemployment that is due to a higher rate of increase in labour costs than implied by productivity growth cannot be offset by low interest rates or higher public spending and tax cuts, but requires changes in the functioning of the labour market. The planned use of petroleum revenues implies that the sheltered sector will lay claim to a larger share of the labour force. This will probably cause a decline in manufacturing employment. The ensuing deterioration in competitiveness may lead to restructuring. In the long run, monetary policy cannot influence overall employment or its distribution across industries. Norway’s terms of trade flucture widely. This is largely attributable to variations in the oil price. However, a substantial portion of petroleum revenues is invested in foreign equities and bonds through the Government Petroleum Fund. Changes in the oil price influence the size of the Fund, but have little effect on the domestic use of petroleum revenues. The Petroleum Fund acts as a buffer against fluctuations in the oil price, which stabilises the krone exchange rate. The Norwegian economy may nevertheless be exposed to disturbances of a type that cannot be absorbed by the Petroleum Fund. We have to be prepared for fluctuations in the value of our currency that are more in line with the fluctuations observed in other countries. The exchange rate will vary. This means that economic agents cannot assume that the krone will be stable against the euro, the US dollar or a weighted average of foreign currencies.
It is the inflation target that is the economy’s nominal anchor. The future size of the Petroleum Fund depends on oil price developments. The fiscal guideline ensures that we only use the return on wealth that has already been accumulated. This makes policy robust to changes in oil prices and ensures that petroleum wealth will be of benefit both today and in the future. The government invests petroleum wealth in foreign securities through the Petroleum Fund. Government wealth is thereby more diversified. These investments have no impact on the Norwegian capital market. The Norwegian government’s most important assets are the Government Petroleum Fund, assets in the National Insurance Fund and government direct ownership interests in enterprises. The Petroleum Fund’s equity investments are distributed across many countries, and all equity holdings are less than one per cent of a company’s total value. The National Insurance Fund's investments are mainly confined to Norway. As a result, changes in the value of the Fund's equity portfolio primarily reflect developments in Norwegian business and industry. The Fund has larger ownership interests in individual companies than the Petroleum Fund, and wider fluctuations in value. The government has substantial direct holdings in individual enterprises. In general, concentrated ownership requires a more strategic ownership approach and gives rise to higher risk than diversified ownership. The capital market serves as an intermediary between the government as investor and enterprises seeking capital. This market makes it possible to separate the government's choices from companies' choices.