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This SDN revisits the debate on bank resolution regimes, first by presenting a simple model of bank insolvency that transparently describes the trade-off involved between bail-outs, bail-ins, and larger capital buffers. The note then looks for empirical evidence to assess the moral hazard consequences of bail-outs and the systemic spillovers from bail-ins.

Bank resolution framework --- Bank resolution --- Banking --- Banks and Banking --- Banks and banking --- Banks --- Crisis management --- Depository Institutions --- Economic & financial crises & disasters --- Externalities --- Finance --- Finance: General --- Financial crises --- Financial Institutions and Services: Government Policy and Regulation --- Financial risk management --- Financial sector policy and analysis --- Financial sector stability --- Financial services industry --- General Financial Markets: Government Policy and Regulation --- Governmental Loans, Loan Guarantees, Credits, and Grants --- International finance --- Macroeconomics --- Micro Finance Institutions --- Moral hazard --- Mortgages --- Regulation and Business Law: General --- Spillovers --- United States

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Based on a permanent income analysis, Gagnon (2018) has prominently suggested that Norway has saved too much, thereby free-riding on the rest of the world for demand. Our public sector balance sheet analysis comes to the opposite conclusion, chiefly because it also accounts for future aging costs. Unsurprisingly, we find that Norway’s current assets exceed its liabilities by some 340 percent of mainland GDP. But its nonoil fiscal deficits have grown very large (to almost 8 percent of mainland GDP) and aging pressures are only commencing. Therefore, Norway’s intertemporal financial net worth (IFNW) is negative, at about -240 percent of mainland GDP. As IFNW represents an intertemporal budget constraint, this implies that Norway’s savings are likely insufficient to address aging costs without additional fiscal action.

Finance, Public --- Debts, Public --- Debts, Government --- Government debts --- National debts --- Public debt --- Public debts --- Sovereign debt --- Debt --- Bonds --- Deficit financing --- Cameralistics --- Public finance --- Public finances --- Currency question --- Accounting --- Macroeconomics --- Public Finance --- Demography --- Public Economics: General --- Social Security and Public Pensions --- National Budget, Deficit, and Debt: General --- Debt Management --- Sovereign Debt --- Forecasts of Budgets, Deficits, and Debt --- State and Local Government: Health, Education, and Welfare --- Governmental Loans, Loan Guarantees, Credits, and Grants --- Energy: Demand and Supply --- Prices --- Public Administration --- Public Sector Accounting and Audits --- Public Enterprises --- Public-Private Enterprises --- Fiscal Policy --- Price Level --- Inflation --- Deflation --- Economics of the Elderly --- Economics of the Handicapped --- Non-labor Market Discrimination --- Financial reporting, financial statements --- Civil service & public sector --- Population & demography --- Oil prices --- Financial statements --- Public sector --- Fiscal policy --- Asset prices --- Public financial management (PFM) --- Aging --- Population and demographics --- Population aging --- Norway