Populism and Civil Society
Since Tocqueville (1835), civil society has been recognized as a cornerstone of liberal democracy. But populists claim to be the only legitimate representatives of the people, leaving no space for civil society. Are populism and civil society enemies? To answer this question, we look at voters’ choices in Europe. We find that individuals belonging to associations are less likely by 1.6 to 2.8 percentage points to vote for populist parties, which is large considering that the average vote share for populist parties is between 12 and 22 percent. This results survives to a large number of robustness checks.
Dialogue between a Populist and an Economist
In this imaginary dialogue, a populist and an economist discuss the role of economic shocks to explain populism. A simple correlation between economic shocks and populism is weak. However, economic shocks can explain well the phenomenon of populism in countries with low pre-existent level of trust. This is confirmed both at the macro cross-country level and also by micro evidence obtained from surveys. Finally, this finding is consistent with the “ideational approach” in political science, which emphasizes how the populist narrative opposes the “corrupt elite” to the “virtuous people.”
Information and Legislative Bargaining: The Political Economy of U.S. Tariff Suspensions
How does information supplied by firms influence policy? How efficient is legislative bargaining within Congress? To answer these questions, this paper studies the political influence of individual firms on Congressional decisions to suspend tariffs on U.S. imports of intermediate goods. We develop a model of legislative bargaining in which firms influence legislators by transmitting information about the value of protection, using verbal messages and lobbying expenditures. We estimate our model using firm-level data on tariff suspension bills and lobbying expenditures from 1999-2006. We find that, controlling for lobbying expenditures, an increase in the number of import-competing firms expressing opposition to a suspension significantly reduces the probability of the suspension being granted, suggesting that firm messages do indeed contain policy-relevant information. We further find that lobbying expenditures by proponent and opponent firms sway this probability in opposite directions. The effect of the number of opponents is significantly larger than that of both opponent and proponent lobbying. We estimate that the greater information content of verbal opposition fully accounts for its larger impact relative to opponent lobbying and explains about three quarters of its greater effect relative to proponent lobbying, with the remaining one quarter explained by legislative bargaining costs.
Wall Street, Capitol Hill, and K Street: Political Influence and Financial Regulation
This paper explores the link between the political influence of the financial industry and financial regulation in the run-up to the global financial crisis. We construct a detailed database documenting the lobbying activities, campaign contributions, and political connections of the financial industry from 1999 to 2006 in the United States. We find strong evidence that spending on lobbying by the financial industry and network connections between lobbyists and the legislators were positively linked to the probability of a legislator changing positions in favor of deregulation. The evidence also suggests that hiring connected lobbyists who had worked for legislators in the past enhanced the effectiveness of lobbying activities.
The Dynamics of Firm Lobbying
How is economic policy made? In this paper we study a key determinant of the answer to the question: lobbying by firms. Estimating a binary choice model of firm behavior, we find significant evidence for the idea that barriers to entry induce persistence in lobbying. The existence of these costs is further confirmed in studying how firms responded to a particular policy change: the expiration of legislation relating to the H-1B visa. Due to its influence on firm behavior, we argue that this persistence fundamentally changes the environment in which legislation is made.
A Fistful of Dollars: Lobbying and the Financial Crisis
Has lobbying by financial institutions contributed to the financial crisis? We use detailed information on financial institutions’ lobbying and mortgage lending to answer this question, and find that lobbying was associated with more risk-taking during 2000-07 and worse outcomes in 2008. Lobbying lenders originated riskier mortgages, securitized at faster intensity, and expanded more. They suffered from higher delinquencies, experienced negative returns during key bank failures, but positive returns with the bailout announcement, and had a higher bailout probability. These findings suggest that lending by politically active lenders played a role in accumulation of risks and thus contributed to the crisis.
Policies, Enforcement, and Customs Evasion: Evidence from India
We examine the effect of tariff policies on evasion of customs duties, in the context of the trade reform in India of the 1990s. By exploiting the variation in tariff rates across time and products, we identify a robust positive elasticity of evasion with respect to tariffs. A second contribution of the paper is to provide some evidence on the impact of enforcement. While we cannot identify the direct impact of enforcement on evasion, we can establish the extent to which enforcement-related factors, such as product characteristics that determine the ease of detection of evasion, affect the evasion elasticity. The results render support to the hypothesis that improvements in enforcement can reduce the responsiveness of evasion to tariffs.