Arbeitspapier

Political connections, allocation of stimulus spending, and the jobs multiplier

Using American Recovery and Reinvestment Act (ARRA) data, we show that firms lever their political connections to win stimulus grants and that public expenditure channeled through politically connected firms hinders job creation. We build a unique database that links information on campaign contributions, state legislative elections, firm characteristics, and ARRA grant allocation. Using exogenous variation in political connections based on ex-post close elections held before ARRA, we causally show that politically connected firms are 38 percent more likely to secure a grant. Based on an instrumental variable approach, we also establish that a one standard deviation increase in the share of politically connected ARRA spending lowers the number of jobs created per $1 million spent by 7.1 jobs. Therefore, the impact of fiscal stimulus is not only determined by how much is spent, but also by how the expenditure is allocated across recipients.

Sprache
Englisch

Erschienen in
Series: Working Paper ; No. 2021-13

Klassifikation
Wirtschaft
Firm Behavior: Empirical Analysis
Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
Fiscal Policy
National Government Expenditures and Related Policies: Procurement
Capitalist Systems: Political Economy
Thema
campaign finance
state grants
public expenditure allocation
American Recovery and Reinvestment Act

Ereignis
Geistige Schöpfung
(wer)
Choi, Joonkyu
Penciakova, Veronika
Saffie, Felipe
Ereignis
Veröffentlichung
(wer)
Federal Reserve Bank of Atlanta
(wo)
Atlanta, GA
(wann)
2021

DOI
doi:10.29338/wp2021-13
Handle
Letzte Aktualisierung
10.03.2025, 11:41 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Choi, Joonkyu
  • Penciakova, Veronika
  • Saffie, Felipe
  • Federal Reserve Bank of Atlanta

Entstanden

  • 2021

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