Natural resources, decentralization, and risk sharing: Can resource booms unify nations?
© 2016 Elsevier B.V.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 trad...
| Main Authors: | , |
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| Format: | Journal Article |
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Elsevier BV
2016
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| Online Access: | https://www.journals.elsevier.com/journal-of-development-economics http://hdl.handle.net/20.500.11937/61721 |
| _version_ | 1848760715391795200 |
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| author | Perez-Sebastian, F. Raveh, Ohad |
| author_facet | Perez-Sebastian, F. Raveh, Ohad |
| author_sort | Perez-Sebastian, F. |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | © 2016 Elsevier B.V.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. |
| first_indexed | 2025-11-14T10:20:11Z |
| format | Journal Article |
| id | curtin-20.500.11937-61721 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T10:20:11Z |
| publishDate | 2016 |
| publisher | Elsevier BV |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-617212018-03-29T09:08:37Z Natural resources, decentralization, and risk sharing: Can resource booms unify nations? Perez-Sebastian, F. Raveh, Ohad © 2016 Elsevier B.V.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. 2016 Journal Article http://hdl.handle.net/20.500.11937/61721 10.1016/j.jdeveco.2016.02.003 https://www.journals.elsevier.com/journal-of-development-economics Elsevier BV restricted |
| spellingShingle | Perez-Sebastian, F. Raveh, Ohad Natural resources, decentralization, and risk sharing: Can resource booms unify nations? |
| title | Natural resources, decentralization, and risk sharing: Can resource booms unify nations? |
| title_full | Natural resources, decentralization, and risk sharing: Can resource booms unify nations? |
| title_fullStr | Natural resources, decentralization, and risk sharing: Can resource booms unify nations? |
| title_full_unstemmed | Natural resources, decentralization, and risk sharing: Can resource booms unify nations? |
| title_short | Natural resources, decentralization, and risk sharing: Can resource booms unify nations? |
| title_sort | natural resources, decentralization, and risk sharing: can resource booms unify nations? |
| url | https://www.journals.elsevier.com/journal-of-development-economics http://hdl.handle.net/20.500.11937/61721 |