Can Black Gold Shine? The Effect of Oil Prices on Nighttime Light in Brazil

Mark Gradstein and Marc Klemp

No 11686, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We explore the existence of a local “resource curse†related to Brazil’s oil re-serves. To this end, we examine the effect of changes in international oil prices interacted with measures of oil access on nighttime light – a measure of econom-ic activity – across the country’s localities. We detect no evidence of a resource curse: in fact, better access to oil enhances the positive effect of oil prices on economic activity. Our estimates indicate that a doubling of oil prices causes an average increase in luminosity of some 50 percent more in oil rich than in oil poor states; and 30 percent more, on average, in localities within 100 km dis-tance to the nearest oil field relative to more remote localities.

Date: 2016-12
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