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.

Fisher Hall 200


PEW: Matt Jackson

Mon, Sep 16, 2019, 4:15 pm to 5:30 pm

PEW: Kristóf Madarasz

Mon, Sep 23, 2019, 4:15 pm to 5:30 pm

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Mon, Sep 30, 2019, 4:15 pm to 5:30 pm

RPPE Visitors: Ernesto Dal Bo

Wed, Oct 2, 2019 (All day) to Wed, Oct 9, 2019 (All day)

PEW: Karam Kang

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PEW: Nancy Qian

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PEW Camilo García-Jimeno

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PEW: Raquel Fernandez

Mon, Dec 9, 2019, 4:15 pm to 5:30 pm

PEW: Matt Gentzkow

Mon, Mar 2, 2020, 4:15 pm to 5:30 pm

Princeton/Warwick/Utah Political Economy Conference 2020

Fri, Mar 20, 2020, 9:00 am to Sat, Mar 21, 2020, 7:00 pm
Location: Rome, Italy