Politicians' Asset Allocations and Economic Bill Proposals
53 Pages Posted: 4 Mar 2022 Last revised: 20 May 2023
Date Written: February 22, 2022
We study the impact of politicians' asset allocations on their economic bill proposals. Using a novel database of comprehensive financial disclosures of the members of Congress in South Korea, we find that congresspeople with more real estate assets in their portfolios are less likely to propose economic bills that tighten the real estate market. To address endogeneity concerns, we use an instrumental variable uniquely available in our empirical setting: an unexpected earthquake in a local city in South Korea. Controlling for other confounding factors, we argue that the result is driven mainly by politicians' financial interests. Overall, our findings suggest that politicians' personal financial positions have a material impact on their choice of economic bill proposals.
Keywords: real estate, political economy, economic bills, politician
JEL Classification: D72, G38, K25, P16
Suggested Citation: Suggested Citation