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Cursed Resources? Political Conditions and Oil Market Outcomes

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  • Gilbert E. Metcalf
  • Catherine Wolfram

Abstract

We analyze how a country’s political institutions affect oil production within its borders. We find a pronounced negative relationship between political openness and volatility in oil production, with democratic regimes exhibiting less volatility than more autocratic regimes. This relationship holds across a number of robustness checks including using different measures of political conditions, instrumenting for political conditions and using several measures of production volatility. Political openness also affects other oil market outcomes, including total production as a share of reserves. Our findings have implications both for interpreting the role of institutions in explaining differences in macroeconomic development and for understanding world oil markets.

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  • Gilbert E. Metcalf & Catherine Wolfram, 2016. "Cursed Resources? Political Conditions and Oil Market Outcomes," The Energy Journal, , vol. 37(1), pages 182-210, January.
    • Handle: RePEc:sae:enejou:v:37:y:2016:i:1:p:182-210
    DOI: 10.5547/01956574.37.1.gmet
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    3. Youngho Chang & Ridwan D. Rusli & Jackson The, 2024. "German Energy Transition and Energy Security," DEM Discussion Paper Series 24-09, Department of Economics at the University of Luxembourg.
    4. Frey, Daniel & Frey, Miriam & Wieslhuber, Carmen, 2013. "Do natural resources define convergence clubs? Empirical evidence from the Kazakh regions," Economic Systems, Elsevier, vol. 37(3), pages 404-414.

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