with the rest of the economy. further, sectors that are more open to trade tend to be more specialized and more volatile ( di giovanni and levchenko 2009 ). and, countries that trade more tend to exhibit higher business - cycle synchronization ( di giovanni and levchenko 2010 ; liao and santacreu 2015 ). given these inferences, it is not surprising to find that globalization has made domestic inflation more sensitive to global demand developments and less sensitive to domestic disturbances ( bis 2016, 68 ). in other words, the global output gap may become a more important determinant of domestic inflation, at the expense of the domestic output gap. another important structural channel to consider is the linkage between cross - border integration and income distribution. it is generally understood that increased trade penetration and specialization leads to the offshoring of labour - intensive, lowerproductivity fragments of the supply process. this leads to higher average productivity levels and higher incomes domestically. logically, it may also lead to an increase in domestic income dispersion, a widely observed stylized fact of the past 20 years and much discussed in the united states. based on a model developed by krugman ( 2008 ), bivens ( 2007 ) concludes that trade restructuring may account for about 15 to 20 per cent of the observed increase in income dispersion. others have found evidence that this linkage may be even more pronounced for developing countries ; for example, mexico experienced a significant increase in income inequality soon after trade liberalization ( goldberg and pavcnik 2007 ). it is evident that the situation varies tremendously from one country to another, in part because the implications of trade liberalization for a given country depend on what other policies are implemented concurrently or subsequently. further, income distribution outcomes that are sometimes attributed to globalization are often driven by other factors, particularly technological change ( autor, dorn and hanson 2015 ; harrigan, reshef and toubal 2016 ). chart 6 shows one summary income distribution statistic, the ratio of the income share of the top 10 per cent to that of the bottom 10 per cent, for the nafta countries. all three showed an increase in income dispersion during the 1990s. this trend has continued into the 2000s for the united states, but has partly reversed in canada and has more than fully reversed in mexico. of course, since other elements of the policy architecture that affect income distribution have not remained constant through this period, we make

øystein olsen : management of the government pension fund global ( gpfg ) introductory statement by mr øystein olsen, governor of norges bank ( central bank of norway ), before the standing committee on finance and economic affairs of the storting ( norwegian parliament ), oslo, 4 may 2015. * * * please note that the text below may differ from the actual presentation. i would like to thank the chair of the committee for the invitation to speak on the management of the government pension fund global. the objective of the government pension fund global is to underpin long - term considerations in the spending of government petroleum revenues. norges bank manages the gpfg with the aim of achieving the highest possible return subject to the framework defined by the ministry of finance, including the limitations set for risk - taking. the investment strategy is designed with a view to achieving this aim. the proportion of real assets in relation to nominal assets is the most important choice with regard to the investment strategy. today, the allocation to equities is 60 percent. the proportion invested in real estate is likely to reach 5 percent in a few years. the ministry of finance has started work on assessing the allocation to real estate and the possibility of investing a portion of the gpfg in unlisted infrastructure. we have been requested to provide advice to the ministry on this matter. real estate investment, and infrastructure in the event, is more resource - intensive than securities investment, both in operational and management terms. norges bank is therefore in the process of establishing a clear organisational divide between the investment division for real estate and other investment divisions. a management team for the real estate division has been established and we will appoint a division head in the course of the year. large real estate investments will be subject to consideration by an investment committee. the largest investments will also be subject to approval by norges bank ’ s executive board. the integrated structure for the management and reporting of gpfg performance and risk will be continued. moreover, the ministry proposes increasing the number of central bank deputy governors from one to two, and that both function as members of the executive board. the executive board will in that case aim to establish a risk and investment committee for investment management. the committee will comprise one deputy governor and two of the executive board ’ s external members. the committee will strengthen and improve the executive board ’ s work on overarching risk management of the gpfg, the framework for the gpf