Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/146470
Authors: 
Corral, Leonardo
Henderson, Heath
Miranda, Juan Jose
Year of Publication: 
2016
Series/Report no.: 
IDB Working Paper Series IDB-WP-687
Abstract: 
This document studies the economic effect of windfall gains by examining a Peruvian natural experiment. The Camisea Fund for Socioeconomic Development (FOCAM) is an inter-governmental fiscal transfer scheme that allocates natural gas royalties generated by the Camisea Gas Project to eligible subnational governments. We exploit the rules governing FOCAM allocation to identify the effect of the transfers on municipal accounts, local infrastructure, and economic development. Using a newly constructed district- level dataset for the years 2005 and 2012, we find evidence of positive impacts on municipal capital expenditures and local infrastructure. However, we also find evidence of a negative impact on municipal current expenditures. More specifically, we find that municipalities with low absorptive capacity coped with the increased administrative burden of FOCAM transfers by reallocating administrative effort toward (away from) executing capital (current) expenditures.
Subjects: 
Inter-governmental Fiscal Transfers
Natural Experiment
Peru
Windfall Gains
JEL: 
C14
H70
O10
O54
Q32
Persistent Identifier of the first edition: 
Creative Commons License: 
http://creativecommons.org/licenses/by-nc-nd/3.0/igo/legalcode
Document Type: 
Working Paper

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