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On the transmission channels for the resource curse

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Arin, K. P.
Braunfels, E.
Zenker, C.

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Crawford School of Public Policy, The Australian National University

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Open Access

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Recent literature shows that oil revenues may have a positive effect on long-run economic growth. However, there is no clear evidence for such an effect in the medium-run, suggesting the existence of a so-called resource-curse in the medium-run. Taking this as a starting point, we investigate all the transmission channels through which oil revenues can retard growth in the medium-run within a Bayesian Model Averaging (BMA) framework. Our results show that oil revenues have indeed a negative effect on the medium-run economic growth, which is transmitted through medium-term trends in oil prices and (poor) institutional quality.

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Centre for Applied Macroeconomic Analysis Working Papers

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