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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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Identification Number: CEDPD960

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
Subjects: 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
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Series: Working Papers > CEP Discussion Papers
Date Deposited: 16 Jul 2010 15:27
Last Modified: 08 Aug 2013 13:39
URI: http://eprints.lse.ac.uk/id/eprint/28691

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