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The Fiscal Impact of Natural Resource Windfalls: Evidence from a Peruvian Natural Experiment

Leonardo Corral, Heath Henderson and Juan Jose Miranda

Land Economics, 2019, vol. 95, issue 4, 577-598

Abstract: We study the local effect of natural resource windfalls by examining a Peruvian natural experiment. We exploit the rules governing the allocation of the Camisea Fund for Socioeconomic Development (FOCAM) to identify the effect of the associated transfers on municipal accounts, local infrastructure, and economic development. We find evidence of positive impacts on municipal capital expenditures and local infrastructure. We also find evidence of a negative impact on municipal current expenditures. Specifically, we find that municipalities with low absorptive capacity coped with the increased administrative burden of FOCAM transfers by reallocating administrative effort away from executing current expenditures.

JEL-codes: H72 O13 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.3368/le.95.4.577
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Handle: RePEc:uwp:landec:v:95:y:2019:i:4:p:577-598