Time-Varying Effects of Oil Supply Shocks on the US Economy

AEJ Macro: Using time-varying BVARs, we find a substantial decline in the shortrun price elasticity of oil demand since the mid-1980s. This finding helps explain why an oil production shortfall of the same magnitude is associated with a stronger response of oil prices and more severe macroeconomic consequences over time, while a similar oil price increase is associated with smaller output effects. Oil supply shocks also account for a smaller fraction of real oil price variability in more recent periods, in contrast to oil demand shocks. The overall effects of oil supply disruptions on the US economy have, however, been modest.

Political foundations of the resource curse: a simplification and a comment

JDE: In this note we show how a considerably simpler model than the one in our original JDE 2006 paper generates all the same results. We also acknowledge an error in the specification of a utility function in our previous paper.

Fracking gave me gonorrhea

Vice: While critics accuse frackers of fouling air, drinking water, and farmland with swamp gas and carcinogens; prostitution, methamphetamine, and sexual crime have stalked drilling operations... “ There's like 80 guys for every woman,” said an industry veteran who has watched a rising sprawl of trailer parks, dive bars, and strip clubs consume the North Dakota prairie in recent years...

What shall we do with the bad dictator?

VoxEU (by Tim Willems et al.): The establishment of the International Criminal Court has increased the commitment of the international community to prosecute malevolent dictators. This column argues that such commitment creates perverse incentives that can provoke dictators to intensify violence in order to ‘blackmail’ international leaders into accepting a peace more favourable to the dictator.

Investor–State Disputes When Can Governments Break Contracts?

Journal of Conflict Resolution: Since 1990, governments around the developing world have broken contracts made with multinational corporations (MNCs), but the incidence of breach varies across countries and over time. I argue that shared firm nationality is a key determinant of contract sanctity. MNCs are likely to divert investments or exit in response to breach with a firm of the same nationality but unlikely to react in ways costly to the host government otherwise. At the level of the economy as a whole, host governments gain permissive space to trade-off among national groups of investors when a greater diversity of foreign direct investment nationalities is present. I use national-, firm-, and dyadic-level data from 1990 to 2008 to demonstrate nationality-tied firm responses to breach. Counterintuitively, deeper integration with more nationally diverse MNCs enables more breach, as governments gain space to prioritize other goals over the property and preferences of foreign capital.

Democracy and Reforms: Evidence from a New Dataset

AEJ Macro: Empirical evidence on the relationship between democracy and economic reforms is limited to few reforms, countries, and years. This paper studies the effect of democracy on the adoption of economic reforms using a new dataset on reforms in the financial, capital and banking sectors, product markets, agriculture, and trade for 150 countries over the period 1960-2004. Democracy has a positive and significant impact on the adoption of economic reforms, but there is scarce evidence that economic reforms foster democracy. Our results are robust to the inclusion of a large variety of controls and estimation strategies.

Mining and development

U of Ottawa paper: This research paper explores ways in which developed mining countries can contribute to sustainable mining development of less developed resource-rich countries. A descriptive study is made of Canada’s and Australia’s development initiatives in the countries where their mining companies operate. To do this, the paper constructs a framework of Sustainable Mining Development (SMD) against which the two country initiatives are measured.

This study suggests that while Australia’ Mining for Development initiative has chosen to put a bigger emphasis on working directly with other governments to support the development of host countries’ mining sector, Canada’ Building the Canadian Advantage initiative has chosen to work more closely with Canadian mining companies and NGOs.

Overall, both initiatives described in this study address certain challenges identified in the literature (section 1) and they are also aligned with the principles that define SMD. However their actions risk being too weak to have a significant impact in host countries and there are certain aspects of SMD that are ignored. While progressive capacity building of host countries’ mining industries has been expansively addressed by the Australian government (and to a limited extent by the Canadian government), there are many other challenges faced by developing mining countries that could be better addressed by both initiatives such as: promoting more revenue transparency and accountability in the industry, supporting host countries’ understanding of the costs and benefits of mining activities and, assisting in the development of mechanisms that ensure thorough compliance of mining regulations and monitoring of commitments and activities by foreign mining companies.