Study: A powerful member of congress can have a negative effect on a state’s economy

Kevin Stacey
EurekAlert

CHICAGO — Having a powerful member of congress could have unintended consequences for a state’s economy, according to a study published today (February 28, 2012) in the Journal of Political Economy.

Researchers from Harvard Business School found that when a member of a state’s congressional delegation becomes chair of a powerful committee, that state sees a tremendous influx of government cash through earmarks and government contracts, as one might expect. But rather than stimulating private sector growth, the study found that the extra government spending actually causes businesses in that state to downsize.

The results challenge the conventional wisdom that it’s unambiguously good to have a powerful ally in Washington, and also call into question the stimulative value of government spending in general, say the authors, Lauren Cohen, Joshua Coval, and Christopher Malloy.

Read More: Study: A powerful member of congress can have a negative effect on a state’s economy

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