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dc.contributor.authorPerez-Sebastian, F.
dc.contributor.authorRaveh, Ohad
dc.date.accessioned2018-02-01T05:19:20Z
dc.date.available2018-02-01T05:19:20Z
dc.date.created2018-02-01T04:59:49Z
dc.date.issued2016
dc.identifier.citationPerez-Sebastian, F. and Raveh, O. 2016. Natural resources, decentralization, and risk sharing: Can resource booms unify nations?. Journal of Development Economics. 121: pp. 38-55.
dc.identifier.urihttp://hdl.handle.net/20.500.11937/61721
dc.identifier.doi10.1016/j.jdeveco.2016.02.003
dc.description.abstract

© 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.

dc.publisherElsevier BV
dc.relation.urihttps://www.journals.elsevier.com/journal-of-development-economics
dc.titleNatural resources, decentralization, and risk sharing: Can resource booms unify nations?
dc.typeJournal Article
dcterms.source.volume121
dcterms.source.startPage38
dcterms.source.endPage55
dcterms.source.issn0304-3878
dcterms.source.titleJournal of Development Economics
curtin.accessStatusFulltext not available


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