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Oil Price Shocks, Income, and Democracy

  • Markus Bruckner

    ()

    (School of Economics, University of Adelaide)

  • Antonio Ciccone

    (Universitat Pompeu Fabra)

  • Andrea Tesei

    (Universitat Pompeu Fabra)

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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File URL: http://www.economics.adelaide.edu.au/research/papers/doc/wp2011-11.pdf
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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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