This paper introduces an empirical growth model that explains the perplexing observed growth resource regime dubbed the resource curse. The main hypothesis advanced in this paper, the rentier predatory state hypothesis, holds that under autocracy, the interaction between political power and resource abundance is expected to lead to poor economic outcomes in the long run. In the empirical model, resource abundance is allowed to interact with political repression to generate a negative impact on economic growth. Depending on the extent of the repression, a state dependent on natural resources (a rentier state) can also become a predatory state, i.e., a rentier predatory state, or, in other words, a rentier state with a high rate of political repression. The resulting net effect of resource abundance on economic growth is contingent on the extent of the repression, and a resource-abundant state with a sufficiently high rate of political repression will have negative economic growth, while a state with a low to moderate rate of political repression will have positive economic growth.

In the years before the global financial crisis of 2008-2010, Qatar experienced a huge buildup of liquidity surplus in the banking system, mainly driven by surging net capital inflows. Structural liquidity surplus; Financial crisis. * We are grateful to four anonymous referees for their constructive suggestions. We thank Cherin Hamadi for excellent research assistance and Megan Foster for help with proofreading. The views expressed here are those of the authors and do not reflect the official view of the Qatar Central Bank.

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Supporters of the Arab oil-exporting countries' decades-long fixed exchange rate regime argue that since, oil is traded in United States (US) dollars, pegging to the dollar is optimal.However, the weakening relationship between oil prices and the US economy in terms of JEL Classification: E32, E61, F44.Keywords: Oil price, Business cycle synchronization, Counter-cyclical monetary policy, Exchange rate regimes. * We are very grateful to Elsayed Elsamadisy for helpful advice and stimulating conversation at an early stage of the paper. We thank two anonymous reviewers for very helpful and detailed comments and suggestions. We also thank Megan Foster for very careful proofreading and numerous suggestions. The views in this paper are solely the responsibility of the authors and should not be interpreted as reflecting the views of the affiliated institutions.