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The Fiscal Impact of Natural Resource Windfalls: Evidence from a Peruvian Natural Experiment

Author

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  • Leonardo Corral
  • Heath Henderson
  • Juan Jose Miranda

Abstract

We study the local effect of natural resource windfalls by examining a Peruvian natural experiment. We exploit the rules governing the allocation of the Camisea Fund for Socioeconomic Development (FOCAM) to identify the effect of the associated transfers on municipal accounts, local infrastructure, and economic development. We find evidence of positive impacts on municipal capital expenditures and local infrastructure. We also find evidence of a negative impact on municipal current expenditures. Specifically, we find that municipalities with low absorptive capacity coped with the increased administrative burden of FOCAM transfers by reallocating administrative effort away from executing current expenditures.

Suggested Citation

  • Leonardo Corral & Heath Henderson & Juan Jose Miranda, 2019. "The Fiscal Impact of Natural Resource Windfalls: Evidence from a Peruvian Natural Experiment," Land Economics, University of Wisconsin Press, vol. 95(4), pages 577-598.
    • Handle: RePEc:uwp:landec:v:95:y:2019:i:4:p:577-598
    Note: DOI: 10.3368/le.95.4.577
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    More about this item

    JEL classification:

    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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