A Simple Explanation for Why Campaign Expenditures are Increasing: The Government is Getting Bigger

Abstract:     
This paper shows that most of the large recent increases in campaign spending for Federal and state offices can be explained by higher government spending. This result holds for both Federal and state legislative campaigns and gubernatorial races and across many different specifications. Evidence is also examined on whether it is the composition and not just the level of expenditures which determines campaign expenditures and whether higher government expenditures similarly results in more candidates competing for office. The data provide some indication that legislative term limits reduce campaign expenditures and increase the number of candidates running for office. Finally, by focusing on the symptoms and not the root causes of ever higher campaign expenditures, this paper argues that the current public policy debate risks changing the form that payments are made rather than actually restricting the level of competition.

Keywords: Campaign Expenditures, Government Growth, Rent Seeking

JEL Classifications: H1, H5, D72

Working Paper Series