Campaign Finance in U.S. House Elections

This paper models the dynamics of fundraising, campagin spending, and accumulation of war chest in the context of U.S. House elections. We structurally estimate the model using campaign finance data and vote share data from 1984 to 2004. A salient feature of U.S. Congressional Elections is that any campaign money that was not used in previous elections can be carried over to the next election with possible deterrence effects. In our counterfactual experiment, we analyze the effect of publicly financing challenger campaigns which is designed to create a more level playing field. We find, however, that the intended effect of such campaign finance reforms are often off-set by increased spending of incumbents.