The Economic Effects of Leaders' Economic Interests: Evidence from Election by Lot in the Florentine Republic.

Do political leaders pursue their own parochial interests? Does the economic background of those in power affect the economy? Estimating the impact of leaders' interests without bias is difficult given the nonrandom nature of transitions between leaders in most regimes. This article exploits a selection mechanism in the Florentine Republic that combines features of election and lottery to evaluate the causal impact of leaders' economic interests. Coupling high-frequency data on the trading value of the Florentine currency with data on the guild association of each leader, I show that the export orientation of the Florentine executive, the standard-bearer of justice, had a large effect on the value of the city's currency, the florin. [ABSTRACT FROM AUTHOR]