New Research on Norway’s SWF

Ashby Monk

Gordon and I just published a new article about the GPF-G in the Rotman International Journal of Pension Management. Perhaps more significantly, the Norwegian SWF has written a paper in response to our paper for the journal. Taken together, the two should make for some interesting reading. Anyway, here they are:

By the way, if you haven’t taken the time to check out this new journal, you really should. The RIJPM is extremely interesting…and it’s free:

1 Response to “New Research on Norway’s SWF”

  1. 1 Rien Huizer June 10, 2010 at 6:07 am

    I think that a very large SWF would offer a very large oil (or other commodity) producer with some autonomous pricing power (or the capacity to organize and discipline a cartel)to carry out pricing strategies based on curtailing supply (either by reducing production or accumulating product). One of these strategies might be to lift prices to levels where less well endowed producers (low per capita revenues, high production cost) would find it advantageous and affordable to support a cartel, thus creating a positive feedback cycle. This would work especially well if world consumption has strong upward momentum. This doe of course not suggest simple causality of the type that SWF growth causes oil price growth. But sometimes this tail may be wagging the dog.

    Another matter is of course that states are not the only commodity wealth accumulators that can use “wealth” for pricing strategies based on temporary output variation (or even the threat thereof, or postponement of capacity increases, mothballing, etc). Mining companies aim for high levels of financial strength just in order to do this).

    What the graph may illustrate is that SWFs are potentially at odds with (theoretic) macroeconomic efficiency by enabling a variety of protectionist or oligopolistic practices. To what extent the state intent for such behaviour is present and financial capacity meaningful, is the real question. It appears that the state commodity funds are not as harmful as the funds that result from currency manipulation and/or overtaxation of consumers.

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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