A Dynamic Model of Campaign Spending in Congressional Elections

In contrast to conventional studies on campaign finance, which focus on the aggregate effect of money on the vote, we propose a more general dynamic model based on temporally disaggregated data. The model is supported by the substantive understanding that at different stages of the campaign process candidates have different goals, and their expenditures should have different effects on the final election outcome. Using Achen's (1986) framework of quasi experiments, the model includes dynamic “assignment equations” and “outcome equations”, which address the problem of nonrandom assignment. A final vote equation is derived in which the coefficients of period-specific incumbent expenditures are constrained by an Almon polynomial. Empirical estimation provides evidence for a three-stage dynamic campaign process.