Efficiency and Equity Implications of Oil Windfalls in Brazil

Large oil reserves off the coast of Brazil may substantially increase the country s oil revenue in the future. A natural resource "curse" could be the consequence if an appropriate share of the oil revenue is not invested. This issue is addressed in this paper for Brazil both theoretically and empirically by focusing on (i) the efficient allocation of oil revenue between investment and consumption; and (ii) because it may be efficient to consume a certain share of the oil revenue, the distributional implications across generations of higher public consumption. The main finding is that, if the... Mehr ...