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Petro populism

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  • Egil Matsen

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

  • Ragnar Torvik

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

  • Gisle J. Natvik

    (Norges Bank)

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 benefits 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 Department of Economics, Norwegian University of Science and Technology in its series Working Paper Series with number 12812.

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Length: 24 pages
Date of creation: 30 Apr 2012
Date of revision:
Handle: RePEc:nst:samfok:12812

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  1. Frederick Van der Ploeg, 2010. "Natural Resources: Curse or Blessing?," CESifo Working Paper Series 3125, CESifo Group Munich.
  2. Rogoff, Kenneth & Sibert, Anne, 1988. "Elections and Macroeconomic Policy Cycles," Review of Economic Studies, Wiley Blackwell, vol. 55(1), pages 1-16, January.
  3. Daron Acemoglu & Georgy Egorov & Konstantin Sonin, 2011. "A Political Theory of Populism," Levine's Working Paper Archive 661465000000001179, David K. Levine.
  4. Frankel, Jeffrey, 2010. "The Natural Resource Curse: A Survey," Working Paper Series rwp10-005, Harvard University, John F. Kennedy School of Government.
  5. Jesus Crespo Cuaresma & Harald Oberhofer & Paul Raschky, 2010. "Oil and the Duration of Dictatorships," Development Research Unit Working Paper Series 10-10, Monash University, Department of Economics.
  6. Andersen, Jørgen Juel & Aslaksen, Silje, 2013. "Oil and political survival," Journal of Development Economics, Elsevier, vol. 100(1), pages 89-106.
  7. James A. Robinson & Ragnar Torvik & Thierry Verdier, 2003. "Politcal Foundations of the Resource Curse," DELTA Working Papers 2003-33, DELTA (Ecole normale supérieure).
  8. Torfinn Harding & Frederick Ploeg, 2013. "Official forecasts and management of oil windfalls," International Tax and Public Finance, Springer, vol. 20(5), pages 827-866, October.
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