Discussion Papers,
Statistics Norway, Research Department

Abstract: This paper provides evidence that oil price fluctuations have been an important driver of petroleum investment in Norway. To show this, I utilize a Bayesian vector autoregressive (BVAR) model combined with local projections, using various investment data from national accounts and firms’ survey data. I find that a 10 percent increase in real oil prices typically results in about a 4 percent rise in petroleum investment, primarily boosting activities in exploration and existing fields, while field development investments show minimal response. These results contribute to a broader understanding of the role of oil prices in shaping Norwegian business cycles.

Keywords: Oil Prices; VAR model; Investment Dynamics; Macroeconomic Shocks; Bayesian Analysis; Energy Economic

JEL-codes: Q43; E22; C32; L71

36 pages, November 2024

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