Short Bio & Research Activity


Francesco Trebbi I am the Bernard T. Rocca Jr. Chair and Professor at the University of California, Berkeley Haas School of Business. I am also Research Associate at the National Bureau of Economic Research (NBER) and Research Fellow of the Centre for Economic Policy Research (CEPR). Before joining UC Berkeley, I was Canada Research Chair and Professor of Economics at the University of British Columbia Vancouver School of Economics and Assistant Professor of Economics at the University of Chicago Booth School of Business. I received my PhD in Economics from Harvard University.

My academic research focuses on Political Economy and Applied Microeconomics broadly defined. I have worked on political institutions and their design, elections and political campaigns, behavior in legislatures, campaign finance, lobbying, banking and regulation. I have also worked on topics related to the political economy of development, corruption, ethnic politics, and intra-state conflict. I have interests in Finance, Development Economics, and Macroeconomics. My primary teaching interests are in Political Economy, Applied Econometrics, Macroeconomics, and Data Science.

I am a Co-Director of the NBER Political Economy Program (POL).


Recent Working Papers


Political Parties as Drivers of U.S. Polarization: 1927-2018 (with Nathan Canen and Chad Kendall)

Abstract

The current polarization of elites in the U.S., particularly in Congress, is frequently ascribed to the emergence of cohorts of ideologically extreme legislators replacing moderate ones. Politicians, however, do not operate as isolated agents, driven solely by their preferences. They act within organized parties, whose leaders exert control over the rank-and-file, directing support for and against policies. This paper shows that the omission of party discipline as a driver of political polarization is consequential for our understanding of this phenomenon. We present a multi-dimensional voting model and identification strategy designed to decouple the ideological preferences of lawmakers from the control exerted by their party leadership. Applying this structural framework to the U.S. Congress between 1927-2018, we find that the influence of leaders over their rank-and-file has been a growing driver of polarization in voting, particularly since the 1970s. In 2018, party discipline accounts for around 65% of the polarization in roll call voting. Our findings qualify the interpretation of – and in some cases subvert – a number of empirical claims in the literature that measures polarization with models that lack a formal role for parties.

Did U.S. Politicians Expect the China Shock? (with Matilde Bombardini and Bingjing Li)

Abstract

In the two decades straddling China's WTO accession, the China Shock, i.e. the rapid trade integration of China in the early 2000's, has had a profound economic impact across U.S. regions. It is now both an internationally litigated issue and the casus belli for a global trade war. Were its consequences unexpected? Did U.S. politicians have imperfect informa- tion about the extent of China Shock's repercussions in their district at the time when they voted on China's Normal Trade Relations status? Or did they have accurate expectations, yet placed a relatively low weight on the subconstituencies that ended up being adversely affected? Information sets, expectations, and preferences of politicians are fundamental, but unobserved determinants of their policy choices. We apply a moment inequality approach designed to deliver unbiased estimates under weak informational assumptions on the informa- tion sets of members of Congress. This methodology offers a robust way to test hypotheses about the expectations of politicians at the time of their vote. Employing repeated roll call votes in the U.S. House of Representatives on China's Normal Trade Relations status, we formally test what information politicians had at the time of their decision and consistently estimate the weights that constituent interests, ideology, and other factors had in congressio- nal votes. We show how assuming perfect foresight of the shocks biases the role of constituent interests and how standard proxies to modeling politician's expectations bias the estimation. We cannot reject that politicians could predict the initial China Shock in the early 1990's, but not around 2000, when China started entering new sectors, and find a moderate role of constituent interests, compared to ideology. Overall, U.S. legislators appear to have had accurate information on the China Shock, but did not place substantial weight on its adverse consequences.

Investing in Influence: Investors, Portfolio Firms, and Political Giving (with Marianne Bertrand, Matilde Bombardini, Raymond Fisman, and Eyub Yegen)

Abstract

Campaign finance laws aim to limit an individual’s influence over the political process. We show that corporate ownership may be an important mechanism by which institutional investors circumvent such constraints and increase their influence. Using data on the political giving and ownership of all 13-F investors during 1980-2018, we show the probability that a firm’s Political Action Committee (PAC) donates to a politician supported by an investor’s PAC nearly doubles after the investor acquires a large stake, and when an investor obtains a board seat, there is a five-fold increase in the probability that a firm donates to a politician supported by the investor. This increase in similarity of political giving coincides precisely with the acquisition election cycle, and is not driven by selection into specific politically strategic acquisitions, as convergence in political behavior is observed even for exogenously determined acquisitions caused by stock index inclusions. Further, we show that portfolio firms’ PAC expenditure experiences a relatively large shift at the acquisition date relative to past giving, whereas no such pattern is observed for institutional investors. We argue that these findings are best explained by investors influencing portfolio firm giving, suggesting that PAC giving may be another means by which influential shareholders impact corporate decision-making, in a manner that amplifies investors’ political voice.