The Value of Political Connections: Evidence from the Czech Republic Miroslav Palanský Abstract This thesis estimates the value of political connections in the Czech Republic and it is divided into two parts. The first one explores the recently extended, most advanced publicly available data set on political party financing in the Czech Republic, covering the time period 1995-2015. We analyze basic patterns in party funding and their development over time. We focus primarily on private funding from both legal and natural persons. The data show that there exists substantial heterogeneity in the volume of private funding across parties and over time, but contributions from the government budget remain the most important source of income for all larger parties. We analyze the available data on donations and discuss several issues regarding the notion that donors may view contributions as investment, yielding possible profits in the future. In the second part, we use the data set of corporate donations to construct a proxy variable for political connections and to estimate the effect of being connected to a political party on the financial performance of such firms. We find that the connected firms perform significantly better than the non- connected ones in the years following the establishment of the...

The current literature regarding the relationship between campaign contributions and roll call voting by elected officials has primarily focused on the congressional level. This study begins to fill the holes in this topic by utilizing city councilor contributions from likely business owners and their stance on tax classification in their respective communities. In this study, I examine contribution data from municipal officials in fourteen communities in Massachusetts as well as the expressed opinions made by city councilors in the 2018 tax classification hearings in order to test the theories that (1) there is a correlation between the actions of political elites and the interests of campaign contributors at the municipal level and (2) that municipal candidates heavily rely on contributions from the business community to finance their campaigns. Though the results are limited, the evidence suggests that if any relationship exists it is negligible and unlikely to exist at any level that would validate concern. The findings also suggest that candidates for office in smaller municipalities are not as dependent on contributions from the business community as those in large cities or at the congressional level. Keywords: Massachusetts, tax classification, municipal, campaign contributions, municipal campaign donations, special interest contributions.

In a time when record numbers of dollars are being spent on campaigns the unregulated dollars are flowing faster than ever. Hundreds of millions of dollars in independent expenditures are being used for “issue advocacy”, print and broadcast advertising, which does not expressly endorse or oppose a candidate for office. The one-time campaign finance ceiling has become the campaign finance basement. Individuals are able to give unlimited dollars to 527 organizations, which function outside of all campaign finance regulation and provide a new path for the flow of political dollars. Since the passage of the Bipartisan Campaign Reform Act, commonly known as the McCain-Feingold Act, federally regulated lobbyists and PACS are being edged out of the political dollar due to contribution limits. It is in 1996 that we witness the birth of 527 organizations and the flourishing growth of soft money spending in the campaign process.