The Transmission of Sectoral Shocks Across the Innovation Network

Recent innovation literature has documented the benefits of cross-pollination of ideas across a wide set of industries and technology fields in an economy. Industrial and trade policies, by contrast, tend to favor economic specialization through the promotion of selected sectors. In this paper we use a firm-level panel of 13 European countries to assess whether an industry-specific policy propagates across the network of innovating firms through technological linkages. Following the competition shock to the European textile sector, triggered by the 2001 removal of import quotas on Chinese textiles, we find that patenting and knowledge sourcing behavior of non-textile firms are negatively affected. At the aggregate regional level, this indirect effect on non-textile firms can be around three to five times larger than the direct effect

The returns to lobbying

Research by Mirko Draca and colleagues on Washington's 'revolving door' lobbyists gives an indication of the value of political connections in the UK.

Revolving Door Lobbyists

Washington's 'revolving door' - the movement from government service into the lobbying industry- is regarded as a major concern for policy-making. We study how ex-government staffers benefit from the personal connections acquired during their public service. Lobbyists with experience in the office of a US Senator suffer a 24% drop in generated revenue when that Senator leaves office. The effect is immediate, discontinuous around the exit period and long-lasting. Consistent with the notion that lobbyists sell access to powerful politicians, the drop in revenue is increasing in the seniority of and committee assignments power held by the exiting politician.Lobbying, revolving door, US Congress, political connections, political elites

In brief: 'Revolving door' lobbyists

Jordi Blanes i Vidal, Mirko Draca and Christian Fons-Rosen estimate the value of political connections in Washington

Essays on knowledge flows, international economics, and entrepreneurship

This thesis consists of three essays on either knowledge flows, international economics, or entrepreneurship. The first chapter focuses on knowledge flows and foreign direct investment. The second chapter aims to understand the pattern of cross-country equity portfolio allocations. The third chapter focuses on how entrepreneurship practices across countries is affected by bureaucratic circumstances. Chapter I investigates whether FDI is a channel through which knowledge spills over from the foreign multinational to the host country. I analyse whether patents developed by local inventors in Central and Eastern Europe (CEE) cite the stock of patents of FDI multinationals more often after these companies have established themselves in CEE. Using a newly hand-collected data sample on privatisation cases resolved during the 1990s, I find that winning bidders experience a 20% greater increase in citations received by the host country compared to the losing bidder. Chapter II presents a model of international portfolio choice based on crosscountry differences in relative factor abundance. The change in factor prices after a positive shock in a particular country provides insurance to countries that have dissimilar factor endowment ratios. The main prediction is that countries with similar relative factor endowments have a stronger incentive to invest in one another for insurance purposes. Empirical evidence supports our theory. Chapter III presents a model of corporate finance that incorporates bureaucratic start-up costs and where sectors differ in their need of external capital. The main theoretical prediction is that a reduction in start-up costs leads to an increase in the share of value added and number of firms in sectors with greater external finance. Intuitively, the sector with high external finance experiences a greater improvement in economies of scale, thereby making it more attractive to consumers. Using sector-country level data on manufacturing production, I find support for the predictions of the model

Colocation and knowledge diffusion: evidence from million dollar plants

This paper uses the entry of large corporations into U.S. counties during the 1980s and 1990s to analyse the effect of plant opening on knowledge spillovers to local inventors. We use a difference-in-differences identification strategy exploiting information on the revealed ranking of possible locations for large plants in the US. Under the identifying assumption that locations not chosen (losers) are a counterfactual for the chosen location (winner), we find that patents of these large corporations are 68% more likely to be cited in the winning counties relative to the losing counties after entry. The effect materializes after the opening of the plant, rather than after the entry decision itself. The increase in citations is stronger for more recent patents whereas patent quality does not seem to play an important role. We find that the increase in citations is larger from patents belonging to the same technology class of the cited patent

The returns to lobbying

Research by Mirko Draca and colleagues on Washington's 'revolving door' lobbyists gives an indication of the value of political connections in the UK

Drought-Reliefs and Partisanship

Altres ajuts: acords transformatius de la UABWe combine a model of symmetric information with selfish and office-motivated politicians and an Regression Discontinuity Design analysis based on close municipal elections to study partisan bias in the allocation of drought aid relief in Brazil. We identify a novel pattern of distributive politics whereby partisan bias materializes only before municipal elections, while it disappears before presidential elections. Furthermore, before mayoral elections, it fades for extreme (high or low) aridity levels while persisting for moderate levels. Our empirical results show that in this case alignment increases the probability of receiving aid relief by a factor of two (equivalent to 18.1 percentage points)