Natural Resources, Decentralization, and Risk Sharing: Can Resource Booms Unify Nations?
Please use this identifier to cite or link to this item:
http://hdl.handle.net/10045/53088
Title: | Natural Resources, Decentralization, and Risk Sharing: Can Resource Booms Unify Nations? |
---|---|
Authors: | Pérez Sebastián, Fidel | Raveh, Ohad |
Research Group/s: | Análisis Económico |
Center, Department or Service: | Universidad de Alicante. Departamento de Fundamentos del Análisis Económico |
Keywords: | Decentralization | Secession | Natural riches | Risk sharing | Corruption | Bargaining power |
Knowledge Area: | Fundamentos del Análisis Económico |
Issue Date: | Jan-2016 |
Publisher: | Elsevier |
Citation: | Journal of Development Economics. 2016. In Press |
Abstract: | Previous studies imply that a positive regional fiscal shock, such as a resource boom, strengthens the desire for separation. In this paper we present a new and opposite perspective. We construct a model of endogenous fiscal decentralization that builds on two key notions: a trade-off between risk sharing and heterogeneity, and a positive association between resource booms and risk. The model shows that a resource windfall causes the nation to centralize as a mechanism to either share risk and/or prevent local capture, depending on the relative bargaining power of the central and regional governments. We provide cross country empirical evidence for the main hypotheses, finding that resource booms: (i) decrease the level of fiscal decentralization with no U-shaped patterns, (ii) cause the former due to risk sharing incentives primarily when regional governments are relatively strong, and (iii) have no effect on political decentralization. |
Sponsor: | Fidel Perez-Sebastian thanks the Spanish Ministry of Science and Technology (ECO2012-36719), Generalitat Valenciana (PROMETEO/2013/037), and the Instituto Valenciano de Investigaciones Económicas for financial support. |
URI: | http://hdl.handle.net/10045/53088 |
ISSN: | 0304-3878 (Print) | 1872-6089 (Online) |
Language: | eng |
Type: | info:eu-repo/semantics/preprint |
Rights: | © Elsevier |
Peer Review: | si |
Appears in Collections: | INV - Análisis Económico - Artículos de Revistas |
Files in This Item:
File | Description | Size | Format | |
---|---|---|---|---|
NRFD_JAN16.pdf | Preprint (acceso abierto) | 219,4 kB | Adobe PDF | Open Preview |
Items in RUA are protected by copyright, with all rights reserved, unless otherwise indicated.