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

Author

Listed:
  • Eric Avis

    (UC Berkeley)

  • Claudio Ferraz

    (Department of Economics, PUC-Rio)

  • Frederico Finan

    (UC Berkeley)

  • Carlos Varjão

    (Stanford)

Abstract

This paper examines the effects of campaign spending limits on political competition and incumbency advantage. We study a reform in Brazil that imposed limits on campaign spending for mayoral elections. These limits were implemented with a discontinuous kink which we exploit for causal identification. We find that stricter limits increase political competition by creating a larger pool of candidates that is on average less wealthy. Moreover, we find that stricter spending limits reduce the incumbency advantage, causing mayors to be less likely to be reelected. These findings are consistent with a contest model with spending caps and endogenous candidate entry.Creation-Date: 2017-06

Suggested Citation

  • Eric Avis & Claudio Ferraz & Frederico Finan & Carlos Varjão, "undated". "Money and Politics: The Effects of Campaign Spending Limits on Political Competition and Incumbency Advantage," Textos para discussão 656, Department of Economics PUC-Rio (Brazil).
    • Handle: RePEc:rio:texdis:656
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • H0 - Public Economics - - General
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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