Template-Type: ReDIF-Paper 1.0
Author-Name: Senay Agca
Author-X-Name-First: Senay 
Author-X-Name-Last: Agca
Author-Name: Deniz Igan 
Author-X-Name-First: Deniz  
Author-X-Name-Last: Igan
Title: The Lion's Share: Evidence from Federal Contracts on the Value of Political Connections
Abstract: We examine the role of political connections in receiving federal funds during an unexpected surge in government defense spending. While the data do not allow identification of a causal link, the analysis uncovers that politically connected firms were awarded larger amounts in federal contracts when available funds increased. Specifically, firms that lobbied received around one third more in the amount of defense contracts compared to those that did not lobby. Similar evidence holds for campaign contributions and board connections. The increase in the amount of contracts obtained is observed primarily for firms that had limited ability to efficiently support Pentagon efforts, and when contracts received less scrutiny. Between political connections and merit-based channels in government contracting, the results mainly, but not exclusively, support the first channel.
Length: 44 pages
Creation-Date: 2022-12
File-URL: https://www.bis.org/publ/work1058.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work1058.htm
File-Format: text/html
Number: 1058
Keywords: Lobbying, Campaign contributions, Board connections, Political connections, Corporate revenue, Government spending, Procurement, Federal contracts
Classification-JEL: D72, G38, H57, H61, P16
Handle: RePEc:bis:biswps:1058