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Seminarios académicos y conferencias

Claudio Ferraz, PUC Río de Janeiro

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

Coautores: Eric Avis, Frederico Finan, Carlos Varjão

20 Diciembre 2017 - 15:30 hrs.

Sala 113, Facultad de Ciencias Económicas y Administrativas UC

Abstract: This paper examines the effects of campaign spending limits on political entry and competition. 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. Stricter spending limits also reduce the likelihood that mayors are reelected. We interpret our reduced-form findings using a contest model with endogenous entry of candidates, which we also estimate. Based on our model’s estimates, we compute the marginal cost of a vote of R$22 for the average challenger and R$27 for the average incumbent.