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Asymmetric oil price shocks, tax revenues, and the resource curse

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  • Zakharov, Nikita

Abstract

The paper proposes an asymmetric relationship between oil rents and institutions such that only positive oil windfalls adversely affect institutional quality, and negative oil windfalls have no impact. We test this theory empirically by studying the dynamics of institutional quality in Russian regions. We find that increases in tax revenues caused by exogenous positive oil price shocks do not change regional income but increase corruption and reduce regional democracy and governance quality; declines in tax revenues from negative oil price shocks do not affect institutional quality but decrease regional income.

Suggested Citation

  • Zakharov, Nikita, 2020. "Asymmetric oil price shocks, tax revenues, and the resource curse," Economics Letters, Elsevier, vol. 186(C).
    • Handle: RePEc:eee:ecolet:v:186:y:2020:i:c:s016517651930240x
    DOI: 10.1016/j.econlet.2019.06.021
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    Cited by:

    1. Su, Chi-Wei & Qin, Meng & Tao, Ran & Umar, Muhammad, 2020. "Does oil price really matter for the wage arrears in Russia?," Energy, Elsevier, vol. 208(C).
    2. Sharma, Chandan & Paramati, Sudharshan Reddy, 2022. "Resource curse versus resource blessing: New evidence from resource capital data," Energy Economics, Elsevier, vol. 115(C).
    3. Khan, Zeeshan & Hossain, Mohammad Razib & Badeeb, Ramez Abubakr & Zhang, Changyong, 2023. "Aggregate and disaggregate impact of natural resources on economic performance: Role of green growth and human capital," Resources Policy, Elsevier, vol. 80(C).
    4. Kassouri, Yacouba & Altıntaş, Halil & Bilgili, Faik, 2020. "An investigation of the financial resource curse hypothesis in oil-exporting countries: The threshold effect of democratic accountability," Journal of Multinational Financial Management, Elsevier, vol. 56(C).

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    More about this item

    Keywords

    Oil; Resource curse; Democracy; Corruption; Income; Russia;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

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