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Oil Price Shocks, Income, and Democracy

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  • Markus Brückner

    (National University of Singapore)

  • Antonio Ciccone

    (UPF-ICREA and Barcelona GSE)

  • Andrea Tesei

    (UPF)

Abstract

We examine the effect of oil price fluctuations on democratic institutions over the 1960–2007 period. We also exploit the very persistent response of income to oil price fluctuations to study the effect of persistent (oil-price-driven) income shocks on democracy. Our results indicate that countries with greater net oil exports over GDP see improvements in democratic institutions following upturns in international oil prices. We estimate that a 1 percentage point increase in per capita GDP growth due to a positive oil price shock increases the Polity democracy score by around 0.2 percentage points on impact and by around 2 percentage points in the long run. The effect on the probability of a democratic transition is around 0.4 percentage points. © 2012 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Bibliographic Info

Article provided by MIT Press in its journal Review of Economics and Statistics.

Volume (Year): 94 (2012)
Issue (Month): 2 (May)
Pages: 389-399

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Handle: RePEc:tpr:restat:v:94:y:2012:i:2:p:389-399

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Web page: http://mitpress.mit.edu/journals/

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Keywords: Democracy; Oil Price Shocks; Persistent Income Shocks;

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References

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Citations

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Cited by:
  1. Francesco Caselli & Andrea Tesei, 2011. "Resource Windfalls, Political Regimes, and Political Stability," CEP Discussion Papers dp1091, Centre for Economic Performance, LSE.
  2. Fenske, James & Kala, Namrata, 2013. "Climate, ecosystem resilience and the slave trade," CEPR Discussion Papers 9449, C.E.P.R. Discussion Papers.
  3. Lin, Faqin & Sim, Nicholas C.S., 2014. "Baltic Dry Index and the democratic window of opportunity," Journal of Comparative Economics, Elsevier, vol. 42(1), pages 143-159.
  4. Markus Bruckner & Alberto Chong & Mark Gradstein, 2011. "Estimating Income Elasticity of Government Expenditures: Evidence from Oil Price Shocks," School of Economics Working Papers 2011-31, University of Adelaide, School of Economics.
  5. Michael Alexeev & Andrey Chernyavskiy, 2014. "Natural Resources And Economic Growth In Russia’s Regions," HSE Working papers WP BRP 55/EC/2014, National Research University Higher School of Economics.
  6. Lakshmi Iyer & Petia Topalova, 2014. "Poverty and Crime: Evidence from Rainfall and Trade Shocks in India," Harvard Business School Working Papers 14-067, Harvard Business School.
  7. Cervellati, Matteo & Fortunato, Piergiuseppe & Sunde, Uwe, 2014. "Violence during democratization and the quality of democratic institutions," European Economic Review, Elsevier, vol. 66(C), pages 226-247.
  8. Brückner, Markus & Schwandt, Hannes, 2013. "Income and Population Growth," IZA Discussion Papers 7422, Institute for the Study of Labor (IZA).
  9. Lin, Faqin & Sim, Nicholas C.S., 2013. "Trade, income and the Baltic Dry Index," European Economic Review, Elsevier, vol. 59(C), pages 1-18.

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