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Do Powerful Politicians Cause Corporate Downsizing?
Open accessAbstract
This paper employs a new empirical approach for identifying the impact of government spending on the private sector. Our key innovation is to use changes in congressional committee chairmanships as a source of exogenous variation in state-level federal expenditures. We show that fiscal spending shocks appear to significantly dampen corporate investment activity. This retrenchment occurs within large and small states and is most pronounced among geographically concentrated firms. The effects are economically meaningful, and the mechanism—entirely distinct from interest rate and tax channels—suggests new considerations in assessing the impact of government spending on private-sector economic activity.
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Citations
Cited by
Politically Connected Boards of Directors and The Allocation of Procurement Contracts
Goldman, E., Rocholl, J., & So, J. (2013) · Review of Finance · doi:10.1093/rof/rfs039 · Cited by 920
Fiscal Stimulus in a Monetary Union: Evidence from US Regions
Nakamura, E., & Steinsson, J. (2014) · American Economic Review · doi:10.1257/aer.104.3.753 · Cited by 911
Can Government Purchases Stimulate the Economy?
Ramey, V. A. (2011) · Journal of Economic Literature · doi:10.1257/jel.49.3.673 · Cited by 772
Political Uncertainty and IPO Activity: Evidence from U.S. Gubernatorial Elections
Çolak, G., Durnev, A., & Qian, Y. (2017) · Journal of Financial and Quantitative Analysis · doi:10.1017/s0022109017000862 · Cited by 486
Safer ratios, riskier portfolios: Banks׳ response to government aid
Duchin, R., & Sosyura, D. (2014) · Journal of Financial Economics · doi:10.1016/j.jfineco.2014.03.005 · Cited by 459
Metadata
- Authors
- Cohen, L., Coval, J., & Malloy, C.
- Venue
- Journal of Political Economy
- Publisher
- University of Chicago Press
- Published
- 2011-12
- Volume
- 119
- Issue
- 6
- Pages
- 1015-1060
- ISSN
- 0022-3808 (ISSN-L)
- 1537-534X
- OpenAlex
- W3126045964
- Cited by
- 302
- References
- 0
- FWCI
- 28.98
- Type
- journal article
- Language
- en
- Open access
- green
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Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
