The Lion's Share: Evidence from Federal Contracts on the Value of Political Connections

Senay Agca and Deniz Igan

No 1058, BIS Working Papers from Bank for International Settlements

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.

Keywords: Lobbying; Campaign contributions; Board connections; Political connections; Corporate revenue; Government spending; Procurement; Federal contracts (search for similar items in EconPapers)
JEL-codes: D72 G38 H57 H61 P16 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2022-12
New Economics Papers: this item is included in nep-pol and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.bis.org/publ/work1058.pdf Full PDF document (application/pdf)
https://www.bis.org/publ/work1058.htm (text/html)

Related works:
Journal Article: The Lion’s Share: Evidence from Federal Contracts on the Value of Political Connections (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:1058

Access Statistics for this paper

More papers in BIS Working Papers from Bank for International Settlements Contact information at EDIRC.
Bibliographic data for series maintained by Martin Fessler ().