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Petro populism


  • 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)


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.

Suggested Citation

  • Egil Matsen & Gisle J. Natvik & Ragnar Torvik, 2012. "Petro populism," Working Paper 2012/06, Norges Bank.
  • Handle: RePEc:bno:worpap:2012_06

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    Other versions of this item:

    • Egil Matsen & Ragnar Torvik & Gisle J. Natvik, 2012. "Petro populism," Working Paper Series 12812, Department of Economics, Norwegian University of Science and Technology.
    • Egil Matsen & Gisle J. Natvik & Ragnar Torvik, 2014. "Petro Populism," Working Papers No 1/2014, Centre for Applied Macro- and Petroleum economics (CAMP), BI Norwegian Business School.

    References listed on IDEAS

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    Cited by:

    1. repec:eee:ecanpo:v:55:y:2017:i:c:p:179-193 is not listed on IDEAS
    2. Tania Masi & Roberto Ricciuti, 2016. "Oil discoveries and democracy," WIDER Working Paper Series 057, World Institute for Development Economic Research (UNU-WIDER).
    3. Ahmed Mahmud & Syed Basher, 2014. "Price volatility and the political economy of resource-rich nations," Economics of Governance, Springer, vol. 15(3), pages 253-279, August.
    4. Iacono, Roberto, 2017. "A comparison of fiscal rules for resource-rich economies," Economic Analysis and Policy, Elsevier, vol. 55(C), pages 179-193.

    More about this item


    Resource curse; Political economy.;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)

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