Abstract:
How do governments respond to an oil field discovery which can sometimes be worth as much as the nation’s gross domestic product? This paper studies the potential effect of oil field discoveries on sectoral allocation of government expenditure (“expenditure share”) both in the short run (i.e., before the production of oil from the discovered oil field) and in the long run (i.e., after the production of oil from the discovered oil field). I used econometrics methodologies of Difference-in-Differences to estimate the potential long-run effect as well as Event Study Design to examine the potential short-run effect on the expenditure share. Through examining, I found no evidence of the potential effects of oil field discoveries on government educational expenditure share, neither in the short-run nor in the long run. In terms of government military expenditure share, I did find evidence of such share increasing following an oil field discovery in the short run, yet I found no evidence of any potential effects in such share in the long run.
Description:
45 pages. A thesis presented to the Department of Economics and the Clark Honors College of the University of Oregon in partial fulfillment of the requirements for degree of Bachelor of Science, 2021.
