ABSTRACT
This much is certain: large oil revenue (relative to the size of the economy) will have an impact. New oil revenue fl ows, or signifi cant increases in existing ones, will transform an economy for better or worse. Usually, expectations are high. Governments and private citizens consider the oil to be a bonanza and the increased income a windfall. Disappointment often follows. Certainly, oil revenue has the potential to make an economy unambiguously better-off but it also produces large risks that the potential benefi ts will not be fully realized or indeed, that may make an economy worse-off than before.
