Oil bonanza and the composition of government expenditure

Government behavior can be affected by natural resource benefits. Benevolent government and political leaders may use them to improve the welfare of people, whereas others for their own interests. To examine effects oil bonanza on comprehensively, this study investigates how giant oilfield discoveries affect size composition expenditure using data from 168 countries between 1972 2008. We find weak evidence that increase total significantly in medium long term, are more evident short especially when controlling other factors affecting expenditure. also obtain democracy plays a mediating role these effects; if level country is consolidated, spending does not even discovering oilfields. Considering each category expenditure, health social protection significantly, they decrease educational Furthermore, economic affairs defense general public services order safety. Finally, net implicit gasoline subsidy term. These findings enhance our understanding behavior.