Can Black Gold Shine? The Effect of Oil Prices on Nighttime Light in Brazil

Mark Gradstein and Marc Klemp

No 11686, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We explore the existence of a local “resource curse†related to Brazil’s oil re-serves. To this end, we examine the effect of changes in international oil prices interacted with measures of oil access on nighttime light – a measure of econom-ic activity – across the country’s localities. We detect no evidence of a resource curse: in fact, better access to oil enhances the positive effect of oil prices on economic activity. Our estimates indicate that a doubling of oil prices causes an average increase in luminosity of some 50 percent more in oil rich than in oil poor states; and 30 percent more, on average, in localities within 100 km dis-tance to the nearest oil field relative to more remote localities.

Date: 2016-12
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