PEC: Federico Huneeus

Thu, Dec 13, 2018, 12:15 pm

We study the causal effect of firms’ lobbying activities on the misallocation of resources through the distortion of firm size. To address the endogeneity between firms’ lobbying expenditure and their size, we propose a new instrument. Specifically, we measure firms’ political connections based on the geographic proximity between their headquarter locations and politicians’ districts in the U.S., and trace the value of these networks over time by exploiting politicians’ assignment to congressional committees. We find that a 10 percent increase in lobbying expenditure leads to a 3 percent gain in revenue. To investigate the macroeconomic consequences of these effects, we develop a heterogeneous firm-level model with endogenous lobbying. Using a novel dataset that we construct, we document new stylized facts about lobbying behavior and use them, including the one from the instrument, to estimate the model. Our counterfactual analysis shows that the return to firms’ lobbying activities amounts to a 22 percent decrease in aggregate productivity in the U.S.

Location: 
Fisher Hall 200
Speaker(s): 

Upcoming

PEW: Alessandra Casella

Mon, Feb 11, 2019, 4:30 pm
Location: 127 Corwin Hall

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Princeton/Warwick/Utah Political Economy Conference 2019

Sat, Mar 23, 2019 (All day) to Sun, Mar 24, 2019 (All day)

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Mon, Mar 25, 2019, 4:30 pm
Location: 127 Corwin Hall

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Mon, Apr 8, 2019, 4:30 pm
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Mon, Apr 15, 2019, 4:30 pm

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Tue, Apr 16, 2019, 4:30 pm

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Mon, Apr 22, 2019, 4:30 pm
Location: 127 Corwin Hall