January 2021

Political Connections, Allocation of Stimulus Spending, and the Jobs Multiplier

Joonkyu Choi, Veronika Penciakova, Felipe Saffie

Summary:

The utilization of American Restoration and Reinvestment Act (ARRA) records, we level to that firms lever their political connections to steal stimulus grants and public expenditure channeled thru politically connected firms hinders job introduction. We produce a various database that hyperlinks advertising campaign contributions and state legislative election outcomes to ARRA grant allocation. The utilization of exogenous variation in political connections per ex-post stop elections held sooner than ARRA, we causally level to that politically connected firms are 64 percent likely to stable a grant. Essentially based totally totally on an instrumental variable device, we moreover set that state-level employment introduction connected sms lån på minuttet grants channeled thru politically connected firms is nil. Attributable to this reality, the affect of fiscal stimulus is not most productive sure by how worthy is spent, however moreover by how the expenditure is allocated all over recipients.

DOI: https://doi.org/10.17016/FEDS.2021.005

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January 29, 2021

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