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Oil Price Shocks, Income, and Democracy

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  • Markus Bruckner

    ()
    (School of Economics, University of Adelaide)

  • Antonio Ciccone

    (Universitat Pompeu Fabra)

  • Andrea Tesei

    (Universitat Pompeu Fabra)

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.

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Bibliographic Info

Paper provided by University of Adelaide, School of Economics in its series School of Economics Working Papers with number 2011-11.

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Length: 38 pages
Date of creation: Feb 2011
Date of revision:
Handle: RePEc:adl:wpaper:2011-11

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Web page: http://www.economics.adelaide.edu.au/
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Keywords: democracy; oil price shocks; persistent income shocks;

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Citations

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Cited by:
  1. Lin, Faqin & Sim, Nicholas C.S., 2013. "Trade, income and the Baltic Dry Index," European Economic Review, Elsevier, Elsevier, vol. 59(C), pages 1-18.
  2. Cervellati, Matteo & Fortunato, Piergiuseppe & Sunde, Uwe, 2014. "Violence during democratization and the quality of democratic institutions," European Economic Review, Elsevier, Elsevier, vol. 66(C), pages 226-247.
  3. Fenske, James & Kala, Namrata, 2013. "Climate, ecosystem resilience and the slave trade," CEPR Discussion Papers, C.E.P.R. Discussion Papers 9449, C.E.P.R. Discussion Papers.
  4. 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, revised Aug 2014.
  5. Michael Alexeev & Andrey Chernyavskiy, 2014. "Natural Resources And Economic Growth In Russia’s Regions," HSE Working papers, National Research University Higher School of Economics WP BRP 55/EC/2014, National Research University Higher School of Economics.
  6. Caselli, Francesco & Tesei, Andrea, 2011. "Resource Windfalls, Political Regimes, and Political Stability," CEPR Discussion Papers, C.E.P.R. Discussion Papers 8662, C.E.P.R. Discussion Papers.
  7. 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.
  8. Markus Bruckner & Alberto Chong & Mark Gradstein, 2011. "Estimating Income Elasticity of Government Expenditures: Evidence from Oil Price Shocks," School of Economics Working Papers, University of Adelaide, School of Economics 2011-31, University of Adelaide, School of Economics.
  9. Brückner, Markus & Schwandt, Hannes, 2013. "Income and Population Growth," IZA Discussion Papers 7422, Institute for the Study of Labor (IZA).

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