On the Transmission Channels for the Resource Curse

Recent literature shows that oil revenues may have a positive effect on long-run
economic growth. However, there is no clear evidence for such an effect in the mediumrun,
suggesting the existence of a so-called resource-curse in the medium-run. Taking
this as a starting point, we investigate all the transmission channels through which oil
revenues can retard growth in the medium-run within a Bayesian Model Averaging
(BMA) framework. Our results show that oil revenues have indeed a negative effect on
the medium-run economic growth, which is transmitted through medium-term trends in
oil prices and (poor) institutional quality.