countries of a true growth multiplier that is larger than that used in the forecasts. Fat ́as and Summers (2016) have since extended this analysis using the same methodology with extrapolated growth forecasts to examine longer run effects.

We take this same technique and apply it to the impact of a resource discovery. Here we find the opposite- namely evidence that the short run growth effect of a resource discovery is systematically smaller than that modelled in forecasts, and in some cases may actually be negative. While experts agree that resource discoveries should be good for growth, in certain policy settings the opposite appears to be true.

# **2 Data**

Our analysis is based on a global cross country panel from 1990 to 2010 and builds on three core datasets. The dataset of giant oil and natural gas field, compiled by Horn (2012), reports on fields of over 500 million barrel equivalent of ultimate recoverable reserves discovered between 1868 and 2010. The dataset provides information on the location and size of the field.<sup>3</sup> In terms of measures of oil field size, we construct a dummy variable on reported discoveries as our main variable. We also create an additional dummy variable for supergiant discoveries.<sup>4</sup> Our third variable of interest on discovery size is the Estimated Ultimate Recovery figure as measured in million of barrel equivalent ( _EURMMBOE_ ). The dataset reports on 996 discoveries since 1868 and 236 discoveries since 1988. The discoveries in our sample are widely distributed geographically, covering 46 countries, and are of significant magnitude for the country’s development: the average discovery equals 1.4 percent GDP in NPV terms.

Forecasts are from the IMF‘s database of global historical World Economic Outlook (WEO) reports which covers growth, balance of payment and inflation forecasts in every WEO published from 1990 until 2016. Reports are published both in spring and fall, but for simplicity, we use the fall edition each year.<sup>5</sup> For each year (t), we compile the geometric mean of growth forecasts (averaged growth rate) starting from year t+1 until t+5, which is period which the forecasts are reported for. Growth is measured in real GDP terms (at constant price).<sup>6</sup> Actual growth over our sample period is also taken from the Fall 2016 IMF WEO report. We use the figures reported to compile similar 5 year ( _t_ +1– _t_ +5) average growth performance variables.

We supplement the dataset with additional data on WTI oil price history from the World Bank (to construct discovery value variable) and GDP per capita (IMF) to construct our developing country dummy. Institutional quality measures are taken from a variety of sources including the Augmented Freedom House index of Political Rights and the various components of the Polity IV scores. Our sovereign credit scores are taken from the database of Institutional Investor Ratings, compiled by Reinhart and Rogoff (2011).

> 3We refer to oil and gas discoveries as oil hereafter.

> 4We also include the single, even larger mega-giant discovery reported during the period of analysis as part of the supergiant category.

> 5We show that our results are robust to the choice of WEO between spring and fall editions.

> 6We also estimate results using the compounded growth in output of the period i.e. the total growth rate.

7