Oil, Volatility and Institutions: Cross-Country Evidence From Major Oil Producers

Kamiar Mohaddes, Amany El-Anshasy and Jeffrey Nugent

No 1115, Working Papers from Economic Research Forum

Abstract: This paper examines the long-run effects of oil revenue and its volatility on economic growth as well as the role of institutions in this relationship. We collect annual and monthly data on a sample of 17 major oil producers over the period 1961—2013, and use the standard panel autoregressive distributed lag (ARDL) approach as well as its cross-sectionally augmented version (CS-ARDL) for estimation. Therefore, in contrast to the earlier literature on the resource curse, we take into account all three key features of the panel: dynamics, heterogeneity and cross-sectional dependence. Our results suggest that (i) there is a significant negative effect of oil revenue volatility on output growth, (ii) higher growth rate of oil revenue significantly raises economic growth, and (iii) better fiscal policy (institutions) can offset some of the negative effects of oil revenue volatility. We therefore argue that volatility in oil revenues combined with poor governmental responses to this volatility drives the resource curse paradox, not the abundance of oil revenues as such.

Pages: 22
Date: 2017-29-06, Revised 2017
New Economics Papers: this item is included in nep-ene, nep-gro and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published by The Economic Research Forum (ERF)

Downloads: (external link)
http://erf.org.eg/wp-content/uploads/2017/06/1115.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://erf.org.eg/wp-content/uploads/2017/06/1115.pdf [301 Moved Permanently]--> https://erf.org.eg/wp-content/uploads/2017/06/1115.pdf)
http://bit.ly/2rsA3vt

Related works:
Working Paper: Oil, Volatility and Institutions: Cross-Country Evidence from Major Oil Producers (2017)
Working Paper: Oil, Volatility and Institutions:Cross-Country Evidence from Major Oil Producers (2015)
Working Paper: Oil, Volatility and Institutions: Cross-Country Evidence from Major Oil Producers (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:erg:wpaper:1115

Access Statistics for this paper

More papers in Working Papers from Economic Research Forum Contact information at EDIRC.
Bibliographic data for series maintained by Namees Nabeel ().