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Money and Politics: The Effects of Campaign Spending Limits on Political Entry and Competition

Author

Listed:
  • Eric Avis
  • Claudio Ferraz
  • Frederico Finan
  • Carlos Varjão

Abstract

This paper studies the effects of campaign spending limits on the political entry, selection, and behavior of local politicians in Brazil. We analyze a reform that limits campaign spending for mayoral elections. The limits were implemented with a discontinuity that we exploit for causal identification. We find that stricter limits reduce reelection rates and increase political competition by attracting more candidates who are also less wealthy and rely less on self-financing. Despite their effects on electoral outcomes, stricter limits did not lead to significant short-run improvements in policy outcomes, such as in education and health.

Suggested Citation

  • Eric Avis & Claudio Ferraz & Frederico Finan & Carlos Varjão, 2022. "Money and Politics: The Effects of Campaign Spending Limits on Political Entry and Competition," American Economic Journal: Applied Economics, American Economic Association, vol. 14(4), pages 167-199, October.
    • Handle: RePEc:aea:aejapp:v:14:y:2022:i:4:p:167-99
    DOI: 10.1257/app.20200296
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    Cited by:

    1. Nathan Canen & Kristopher Ramsay, 2023. "Quantifying Theory in Politics: Identification, Interpretation and the Role of Structural Methods," Papers 2302.01897, arXiv.org.
    2. Víctor Saavedra & Andrés Felipe Soto & Miguel Ángel Carvajal, 2023. "Análisis de la Política de Financiación Electoral en Colombia," Informes de Investigación 20741, Fedesarrollo.

    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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