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Do oil windfalls improve living standards?: evidence from Brazil

Caselli, Francesco and Michaels, Guy (2009) Do oil windfalls improve living standards?: evidence from Brazil. CEP Discussion Paper, CEDPD960. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Abstract

We use variation in oil output among Brazilian municipalities to investigate the effects of resource windfalls. We find muted effects of oil through market channels: offshore oil has no effect on municipal non-oil GDP or its composition, while onshore oil has only modest effects on non-oil GDP composition. However, oil abundance causes municipal revenues and reported spending on a range of budgetary items to increase, mainly as a result of royalties paid by Petrobras. Nevertheless, surveybased measures of social transfers, public good provision, infrastructure, and household income increase less (if at all) than one might expect given the increase in reported spending. To explain why oil windfalls contribute little to local living standards, we use data from the Brazilian media and federal police to document that very large oil output increases alleged instances of illegal activities associated with mayors.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk/
Additional Information: © 2009 The Authors
Library of Congress subject classification: F History United States, Canada, Latin America > F1201 Latin America (General)
H Social Sciences > HN Social history and conditions. Social problems. Social reform
H Social Sciences > HB Economic Theory
Journal of Economic Literature Classification System: O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O33 - Technological Change: Choices and Consequences; Diffusion Processes
H - Public Economics > H7 - State and Local Government; Intergovernmental Relations > H71 - State and Local Taxation, Subsidies, and Revenue
H - Public Economics > H1 - Structure and Scope of Government > H11 - Structure, Scope, and Performance of Government
H - Public Economics > H4 - Publicly Provided Goods > H40 - General
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O13 - Agriculture; Natural Resources; Energy; Environment; Other Primary Products
O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O32 - Management of Technological Innovation and R&D
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development
E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy Formation, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation
H - Public Economics > H7 - State and Local Government; Intergovernmental Relations > H72 - State and Local Budget and Expenditures
H - Public Economics > H7 - State and Local Government; Intergovernmental Relations > H76 - State and Local Government: Infrastructures; Procurement; Public Safety; Penal Systems; Other Expenditure Categories
H - Public Economics > H7 - State and Local Government; Intergovernmental Relations > H75 - State and Local Government: Health, Education, and Welfare
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: CEDPD960
Date Deposited: 16 Jul 2010 15:27
URL: http://eprints.lse.ac.uk/28691/

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