Money and Politics: The Effects of Campaign Spending Limits on Political Entry and Competition
- American Economic Journal: Applied Economics (Forthcoming)
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 selffinancing.
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.
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