Ufuk Akcigit, Salome Baslandze, Francesca Lotti, 30 November 2018

Corruption, especially rent-seeking behaviour by politicians and firms, has adverse consequences for competition and ultimately growth. This column explores how political connections influence firms’ outcomes in Italy. The results point to a ‘leadership paradox’, whereby market-leading firms are more likely to be politically connected than their competitors, but less likely to innovate. At the aggregate level, political connections tend to be associated with worse industry dynamics, including lower entry, reallocation, growth, and productivity.

Rui Albuquerque, Zicheng Lei, Jörg Rocholl, Chendi Zhang, 09 July 2016

As US states amass control of business through public pension funds, important questions about potential agency conflicts are raised. This column uses a landmark ruling, which in effect created a new channel of corporate political activism, to investigate this agency conflict. Firms with high institutional ownership have seen lower returns following the ruling. The findings suggest that political connections are an important mechanism of political activism by corporations with state public pension fund ownership.

Daron Acemoğlu, Simon Johnson, Amir Kermani, James Kwak, Todd Mitton, 25 February 2014

Political connections affect economic outcomes in emerging markets. This column discusses new evidence showing that something similar goes on in the US. Over the ten trading days following the announcement of Timothy Geithner as Treasury Secretary, financial firms with a connection to Geithner experienced a cumulative abnormal return of about 12% relative to other financial sector firms. This reversed when his nomination ran into trouble due to unexpected tax issues.

Simon Luechinger, Christoph Moser, 27 September 2012

The presidential election campaign is in full swing in the US. Whoever wins the presidential race will face the challenge of filling top positions in the federal administration. Since some political appointees traditionally come from the private sector, allegations of conflicts of interest will emerge. But are connected firms really expected to profit? This column sheds light on this issue.

Federico Cingano, Paolo Pinotti, 17 August 2009

Rent-seeking by politicians and firms likely distorts the allocation of public resources. This column shows that, in Italy, when politicians appointed with the majority coalition are directly involved in the economic activity of private firms, those firms’ profits increase by 5% on average. The increase can be as high 20% in markets highly dependent on public demand, implying a significant welfare loss.

Joachim Voth, 18 September 2008

Around the globe, politically connected firms are more valuable. Nazi Germany was no different, though historians have lacked convincing evidence to prove that claim. This column shows that Nazi-linked firms reaped astoundingly large returns when Adolf Hitler came to power.

Joachim Voth, 05 September 2008

From Indonesia and Malaysia to Italy, politically connected firms are more valuable than their less fortunate competitors. Yet a key event in the history of the twentieth century has not been examined in terms of the value of political connections: the Nazi rise to power. In an interview recorded at the annual congress of the European Economic Association in Budapest in August 2007, Joachim Voth talks to Romesh Vaitilingam about his research with Thomas Ferguson on this question.

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