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Petro Rents, Political Institutions, and Hidden Wealth: Evidence from Bank Deposits in Tax Havens

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  • Jørgen Juel Andersen

    ()

  • Niels Johannesen

    ()

  • David Dreyer Lassen

    ()

  • Elena Paltseva

    ()

Abstract

Do political institutions limit rent-seeking by politicians? To address this question, we study the transformation of petroleum rents into hidden wealth using unique data on bank deposits in tax havens. We find that petroleum rents are associated with increases in hidden wealth, but only when political institutions are very weak. We also discern an interesting interaction with political risk: events such as elections and domestic conflict are preceded by increases in hidden wealth when political institutions are weak, which is consistent with a view of autocratic rulers as forward-looking rent-seekers whose behavior is constrained by political checks and balances.

Suggested Citation

  • Jørgen Juel Andersen & Niels Johannesen & David Dreyer Lassen & Elena Paltseva, 2013. "Petro Rents, Political Institutions, and Hidden Wealth: Evidence from Bank Deposits in Tax Havens," Working Papers No 7/2013, Centre for Applied Macro- and Petroleum economics (CAMP), BI Norwegian Business School.
  • Handle: RePEc:bny:wpaper:0016
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    11. Niels Johannesen & Gabriel Zucman, 2014. "The End of Bank Secrecy? An Evaluation of the G20 Tax Haven Crackdown," American Economic Journal: Economic Policy, American Economic Association, vol. 6(1), pages 65-91, February.
    12. Przeworski,Adam & Alvarez,Michael E. & Cheibub,Jose Antonio & Limongi,Fernando, 2000. "Democracy and Development," Cambridge Books, Cambridge University Press, number 9780521790321, December.
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    Cited by:

    1. Niels Johannesen & Tim Stolper, 2017. "The Deterrence Effect of Whistleblowing: An Event Study of Leaked Customer Information from Banks in Tax Havens," CESifo Working Paper Series 6784, CESifo Group Munich.
    2. Bouvatier, Vincent & Capelle-blancard, Gunther & Delatte, Anne-Laure, 2017. "Banks in Tax Havens: First Evidence based on Country-by-Country Reporting," CEPR Discussion Papers 12222, C.E.P.R. Discussion Papers.
    3. Ralph-C. Bayer & Roland Hodler & Paul A. Raschky & Anthony Strittmatter, 2018. "Expropriations, Property Confiscations and New Offshore Entities: Evidence from the Panama Papers," CESifo Working Paper Series 7328, CESifo Group Munich.
    4. Niels Johannesen & Tim B.M. Stolper, 2017. "The deterrence effect of whistleblowing," EPRU Working Paper Series 17-01, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    5. Thorsten Beck & Steven Poelhekke, 2017. "Follow the money: Does the Financial Sector Intermediate Natural Resource Windfalls?," Tinbergen Institute Discussion Papers 17-027/VIII, Tinbergen Institute.
    6. repec:eee:pubeco:v:162:y:2018:i:c:p:89-100 is not listed on IDEAS
    7. Vincent Bouvatier & Gunther Capelle-Blancard & Anne-Laure Delatte, 2017. "Banks Defy Gravity in Tax Havens," Working Papers 2017-16, CEPII research center.
    8. Jean-Francois Carpantier & Wessel Vermeulen, 2014. "Emergence of Sovereign Wealth Funds," OxCarre Working Papers 148, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    9. Alstadsæter, Annette & Johannesen, Niels & Zucman, Gabriel, 2018. "Who owns the wealth in tax havens? Macro evidence and implications for global inequality," Journal of Public Economics, Elsevier, vol. 162(C), pages 89-100.
    10. Ivar Kolstad, 2017. "Protected tax havens: Cornering the market through international reform?," CMI Working Papers 7, CMI (Chr. Michelsen Institute), Bergen, Norway.
    11. Littke, Helge C. N., 2018. "Channeling the iron ore super-cycle: The role of regional bank branch networks in emerging markets," IWH Discussion Papers 11/2018, Halle Institute for Economic Research (IWH).
    12. Shafik Hebous & Niels Johannesen, 2015. "At Your Service! The Role of Tax Havens in International Trade with Services," CESifo Working Paper Series 5414, CESifo Group Munich.
    13. Niels Johannesen & Jukka Pirttilä, 2016. "Capital flight and development: An overview of concepts, methods, and data sources," WIDER Working Paper Series 095, World Institute for Development Economic Research (UNU-WIDER).

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