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Petro populism

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Author Info

  • Egil Matsen

    ()
    (Norwegian University of Science and Technology, Department of Economics)

  • Gisle J. Natvik

    ()
    (Norges Bank (Central Bank of Norway))

  • Ragnar Torvik

    ()
    (Norwegian University of Science and Technology, Department of Economics)

Abstract

We aim to explain petro populism —the excessive use of oil revenues to buy political support. To reap the full gains of natural resource income politicians need to remain in office over time. Hence, even a purely rent-seeking incumbent who only cares about his own welfare, will want to provide voters with goods and services if it promotes his probability of remaining in office. While this incentive benfits citizens under the rule of rent-seekers, it also has the adverse effect of motivating benevolent policymakers to short-term overprovision of goods and services. In equilibrium politicians of all types indulge in excessive resource extraction, while voters reward policies they realize cannot be sustained over time. Our model explains how resource wealth may generate political competition that reduces the tenability of equilibrium policies.

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Bibliographic Info

Paper provided by Norges Bank in its series Working Paper with number 2012/06.

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Length: 23 pages
Date of creation: 19 Apr 2012
Date of revision:
Handle: RePEc:bno:worpap:2012_06

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Related research

Keywords: Resource curse; Political economy.;

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References

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  1. Robinson, James A. & Torvik, Ragnar & Verdier, Thierry, 2006. "Political foundations of the resource curse," Journal of Development Economics, Elsevier, vol. 79(2), pages 447-468, April.
  2. Crespo Cuaresma, Jesus & Oberhofer, Harald & Raschky, Paul, 2010. "Oil and the duration of dictatorships," Working Papers in Economics and Finance 2010-3, University of Salzburg.
  3. Frederick Van der Ploeg, 2010. "Natural Resources: Curse or Blessing?," CESifo Working Paper Series 3125, CESifo Group Munich.
  4. Kenneth Rogoff & Anne Sibert, 1986. "Elections and Macroeconomic Policy Cycles," NBER Working Papers 1838, National Bureau of Economic Research, Inc.
  5. Daron Acemoglu & Georgy Egorov & Konstantin Sonin, 2013. "A Political Theory of Populism," Levine's Working Paper Archive 786969000000000654, David K. Levine.
  6. Torfinn Harding & Frederick van der Ploeg, 2012. "Official forecasts and management of oil windfalls," Discussion Papers 676, Research Department of Statistics Norway.
  7. Frankel, Jeffrey, 2010. "The Natural Resource Curse: A Survey," Working Paper Series rwp10-005, Harvard University, John F. Kennedy School of Government.
  8. Andersen, Jørgen Juel & Aslaksen, Silje, 2013. "Oil and political survival," Journal of Development Economics, Elsevier, vol. 100(1), pages 89-106.
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Cited by:
  1. Ahmed Saber, Mahmud & Syed Abul, Basher, 2014. "Price volatility and the political economy of resource-rich nations," MPRA Paper 56564, University Library of Munich, Germany.

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