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Cursed Resources? Political Conditions and Oil Market Outcomes

Cursed Resources? Political Conditions and Oil Market Outcomes

by Gilbert Metcalf (Tufts University) and  Catherine Wolfram (UC Berkeley)

Presented by Gilbert Metcalf

Venue: MC2-850, Thursday, October 28, 12.30-2 pm

 

Abstract
This paper analyzes how a country’s political institutions affect oil production within its borders.  We show that there is a pronounced negative relationship between a country’s political openness and the short-run volatility in oil production, with very democratic regimes exhibiting less volatility in their oil production than more autocratic regimes.  This result holds across a number of robustness checks including using several different measures of political conditions, instrumenting for political conditions and using a range of measures of oil production volatility.  Political openness also affects several other oil market outcomes, including volatility in producing wells and average production as a share of reserves.  Our findings have implications both for interpreting the macroeconomic literature on the role of institutions in determining differences in economic development and for understanding world oil markets.

 
Bio
Gilbert E. Metcalf is Professor of Economics at Tufts University and a Research Associate at the National Bureau of Economic Research. Metcalf has taught at Princeton University, the Kennedy School of Government at Harvard University, and MIT. He has served as a consultant to various organizations including the Chinese Ministry of Finance, the U.S. Department of the Treasury, and Argonne National Laboratory. He is currently a lead author for the IPCC's Fifth Assessment Report. Metcalf's primary research area is public finance applied to taxation, energy, environmental and climate economics. Metcalf received a B.A. in Mathematics from Amherst College, an M.S. in Agricultural and Resource Economics from the University of Massachusetts Amherst, and a Ph.D. in Economics from Harvard University.


For further contact about the presentation and paper, contact Jon Strand (DECEE), ext 85122, jstrand1@worldbank.org




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