We examine the economic impacts of natural resource revenue-sharing systems, where central governments transfer a portion of resource revenue to producing regions. Using a natural experiment in Indonesia, we separately identify the effects of shared revenue and resource extraction. Contrary to Dutch disease concerns, shared oil and gas revenue does not harm local manufacturing firms, while extraction promotes manufacturing growth. Both extraction and shared revenue significantly raise local non-oil GDP. We find suggestive evidence of larger gains from shared revenue in areas without onshore extraction, implying central governments could improve aggregate welfare by channeling more resource revenue toward resource-poor areas.

We estimate the impact of local government fragmentation on economic activity in Indonesia over 2000–2014, when the number of districts increased by 50 percent. Exploiting idiosyncratic variation in the timing of district splits, we find that fragmentation reduces district GDP in the short term despite large increases in central transfers. The GDP decline is larger in "child" districts that acquire a new capital and government. Furthermore, splitting districts focus spending on administration without improving public services or reducing red tape and corruption. The downsides of fragmentation due to economies of scale and low bureaucratic capacity outweigh potential upsides.

I exploit unusual policy variation in Indonesia to examine how local responses to intergovernmental grants depend on their persistence. A national reform generated permanent increases in the general grant that were larger for less densely populated districts, while hydrocarbon-rich districts experienced transitory shocks to shared resource revenue. Public service delivery strongly responded to the permanent shock, but not to the transitory shocks, consistent with districts providing lumpy public services as a function of lifetime fiscal resources. The timing and composition of expenditure responses are consistent with this mechanism. The results suggest that the underwhelming effects of natural resource revenue found in previous studies could be due, in part, to forward-looking behavior by local governments.

We evaluate how fiscal capacity and migration respond to the introduction of the individual income tax, drawing on new panel data on US states from 1900 to 2010. We find that the introduction of the income tax increased revenue per capita by 12 percent in the short term, 15 percent in the medium term, and 17 percent in the long term. The absolute level of revenue, however, did not significantly change over the long term for post–World War II adopters. To explain this, we show that the introduction of the income tax induced significant outmigration to non-income-tax states by middle- and high-earning households.

We estimate the long-run effects of oil wealth on development by exploiting spatial variation in sedimentary basins—areas where petroleum can potentially form. Instrumental variables estimates indicate that oil production impedes democracy and fiscal capacity development, increases corruption, and raises GDP per capita without significantly harming the non-resource sectors of the economy. We find no evidence that oil production increases internal armed conflict, coup attempts, or political purges. In several specifications failure to account for endogeneity leads to substantial underestimation of the adverse effects of oil, suggesting that countries with higher-quality political institutions and greater fiscal capacity disproportionately select into oil production.

We consider the role of a politician's age in Italian municipal governments. When the term limit is not binding, younger mayors engage more often in political budget cycles than older mayors. Thus younger politicians behave more strategically in response to electoral incentives, probably because they expect to have a longer political career and stronger career concerns. We discuss and rule out several alternative interpretations.