The Personal Wealth Interests of Politicians and Government Intervention in the Economy

Abstract:     
We examine whether the incentives derived from personal wealth affect politicians’ decisions about government intervention in the economy. We investigate this question in the context of the government’s support of financial institutions under the Emergency Economic Stabilization Act in 2008. We find that the personal wealth interests of politicians are positively associated with voting in favor of key legislative proposals to support the financial sector and, subsequently, with the amount and timing of the support that financial institutions receive.

Number of Pages in PDF File: 49

Keywords: Financial Crisis, Politicians, Investments, Personal Wealth, Voting, Government Intervention

JEL Classification: D72, G11, G21, G22, G38

working papers series