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The Political Costs of Oil Price Shocks

Rabah Arezki, Simeon Djankov, Ha Nguyen and Ivan Yotzov

No 9763, CESifo Working Paper Series from CESifo

Abstract: We explore the effect of oil import price shocks on political outcomes using a worldwide dataset on elections of chief executives. Oil import price shocks cause a reduction in the odds of reelection of incumbents, an increase in media chatter about fuel prices, and an increase in non-violent protests. These results are present in democracies but absent in autocracies. To explain the dichotomy, we show that the pass-through from international to domestic fuel prices is limited in autocracies with adverse consequences on levels of debt and international reserves. The results point to the interdependence of goods markets and politics.

Keywords: elections; democracy; autocracy; incumbent; oil prices; economic shocks (search for similar items in EconPapers)
JEL-codes: D72 E21 P16 Q43 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-dem, nep-ene, nep-mac and nep-pol
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