uu.seUppsala University Publications
Change search
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf
Finders, keepers?
Ifo Inst, Munich, Germany.
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics. Oslo Metropolitan Univ, Oslo Business Sch, Oslo, Norway.
Univ Penn, Wharton Sch, Philadelphia, PA USA; NBER, Cambridge, MA USA.
2019 (English)In: Journal of Public Economics, ISSN 0047-2727, E-ISSN 1879-2316, Vol. 169, p. 17-33Article in journal (Refereed) Published
Abstract [en]

Natural resource taxation and investment often exhibit cyclical behavior, driving political turmoil and shifts in power. By way of a rational-expectations model under limited commitment, we show that cycles arise endogenously from the interaction between firms' investment decisions and government taxation. Large resource revenues induce a high tax, lowering exploration investment and thereby future findings. This later leads the government to reduce tax rates, inducing high investment and high future taxes, and so on. Cycling may occur even under a government that cares about the future, but a sufficiently patient government is also able to avoid cycles altogether. Our model can thus also account for why some countries have stable resource taxation regimes. Tax differentiation on mine vintage avoids cycles as well and, surprisingly, increases government revenues. Our findings are consistent with stylized facts: we document evidence of cyclical behavior in a large number of countries with both strong and weak institutions, and provide detailed case studies of two Latin American countries. A simple empirical analysis suggests that our investment mechanism is consistent with about half of all expropriations in the oil and gas sector, the same fraction as exogenous price shocks.

Place, publisher, year, edition, pages
2019. Vol. 169, p. 17-33
Keywords [en]
Natural resource taxation, Foreign direct investment, Expropriation, Tax cycles, Investment cycles
National Category
Economics
Identifiers
URN: urn:nbn:se:uu:diva-377376DOI: 10.1016/j.jpubeco.2018.10.007ISI: 000456759800002OAI: oai:DiVA.org:uu-377376DiVA, id: diva2:1291425
Funder
EU, FP7, Seventh Framework Programme, 269788Available from: 2019-02-25 Created: 2019-02-25 Last updated: 2019-02-25Bibliographically approved

Open Access in DiVA

No full text in DiVA

Other links

Publisher's full text

Authority records BETA

Spiro, Daniel

Search in DiVA

By author/editor
Spiro, Daniel
By organisation
Department of Economics
In the same journal
Journal of Public Economics
Economics

Search outside of DiVA

GoogleGoogle Scholar

doi
urn-nbn

Altmetric score

doi
urn-nbn
Total: 30 hits
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf