Working Paper: NBER ID: w23508
Authors: Eric Avis; Claudio Ferraz; Frederico Finan; Carlos Varjao
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.
Keywords: Campaign Spending Limits; Political Competition; Incumbency Advantage
JEL Codes: H00
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| stricter spending limits (H72) | increase political competition (D72) |
| stricter spending limits (H72) | decrease in candidate wealth (D79) |
| stricter spending limits (H72) | reduce incumbency advantage (D72) |
| stricter spending limits (H72) | election of less wealthy candidates (D72) |
| stricter spending limits (H72) | candidates finance larger portion of campaigns through personal funds (D14) |