Assorted links

1. What is the trend in per voter campaign expenditures?

2. The Cohen, Coval, and Malloy fiscal policy paper is now out as lead article in the JPE, one version here (pdf).  I still find the result hard to believe (an extreme form of crowding out), but I can’t find anything wrong with their work.

3. Profile of Fred Bergsten (pdf).

4. “People who don’t have the money don’t understand the stress,” more here, via Chris F. Masse.


The CCL paper finds extreme crowding out when capacity utilization is high and unemployment low. They find much less crowding out when capacity utilization low and unemployment high. What other result could one plausibly expect to get in response to free money (note, not borrowed money, taxed money, or printed money but free money) poured into a state?

1. Interesting, but I think the measure is largely meaningless, because it doesn't capture non-campaign expenditures (e.g. op-eds, ideologically-driven news stories, or talk radio) which presumably would vastly exceed other expenditures on political speech.

4. Was anyone else reminded of The Millionaire Next Door?

4. I love the taste of schadenfreude in the morning.

4. Mockery comes easily to me, but this is just too easy. (TallDave: Yes!)

4. It amazes me how quickly people scale up their expenditures to match their income. Fortunately my wife spent her 20s as a grad student and so we got used to living the frugal life. Now that she is working and we have more money our expenses have gone up, but not nearly as much as our income.

Yep, same here. I don't understand how people live life knowing that if they're unemployed for a year or two they could be destitute.

4. It amazes me how people can lack such self-awareness that they say these things to a reporter.

It no longer amazes me how selective people are when looking for stuff to complain about / hate:
CEO income / average worker's income = 100 - Evil! To the guillotines!
Average American's income / Average African's income = 100 - Heh, what ya gonna do...

That's right Jamie in New York City. It's pretty clear that it's all us middle-Americans who are the bad guys here.

Middle ones shout louder than the bottom and the top.

Two words: Mitt Romney.

As usual, Mitt's a trend-setter! (not really)

"In the year that follows a congressman’s ascendency, the average firm in his state cuts back capital expenditures by roughly 15%. These firms also significantly reduce R&D expenditures and increase payouts to their investors."

So, the Money goes to Investors & hurts the Local Economy and Average Person. & this is a surprise?

Thats a good signal that one should withdraw their money from the firm. Cutting R&D is very long term negative.

Apparently, The Neoclassical Model predicts Crony Capitalism.

I'm not someone who keeps up with economics journals, but as someone who has studied a bit and who does statistics for a living--holy crap that CCM paper is awesome. I really enjoyed reading that.

I like the CCM paper, thanks for pointing it out. One criticism I have is that they don't (unless I missed it) report their results for how private behaviour changes when a state loses a chairmanship (they do report that this leads to significant drops in government investment, but don't follow that observation through). Makes you suspect those results didn't fit their story quite as well?

The only way to lose the chairmanship is to lose an election in your home state or to retire. Both are correlated with the business conditions in the home state, and thus not valid instruments. Someone in some other state retiring and handing the state a chairmanship doesn't have that problem.

Inflation adjusting is a terrible way to measure campaign expenditures -- it totally ignores growth of national wealth and income. As the nation becomes richer, people can both (1) more easily afford to spend more money on elections, and (2) gain more from doing so, as there is more for the government to direct in their favor, if they can get it to do so.

On its face this would suggest that campaign spending would be expected to increase steadily as a portion of national income.

Yet when I adjusted the numbers for GDP, it is remarkable that this *hasn't.* been so. By % of GDP, the most expensive presidential campaigns:

Yr ...... % of GDP
1968 ... 0.0094%
2008 ... 0.0092%
1932 ... 0.0083%
1908 ... 0.0081%
1964 ... 0.0062%
2004 ... 0.0061%
1896 ... 0.0054%
1972 ... 0.0051%

Yet another thing that everyone knows that ain't so.

Hmmm, those numbers didn't align as displayed (what happened to the preview function?) Let me try again for ease of reading.

By % of GDP, the most expensive presidential campaigns:

Yr …… % of GDP

1968 … 0.0094%

2008 … 0.0092%

1932 … 0.0083%

1908 … 0.0081%

1964 … 0.0062%

2004 … 0.0061%

1896 … 0.0054%

1972 … 0.0051%

Dang, typo on my spreadsheet. Just can't get this right. :-(

The #1 most expensive election was 1896, 0.0434% of GDP. Then 1968, 2008, 1932...

But this only reinforces the point made. And it brings to mind the question asked by many political scientists: With such a *vast* amount at stake in our $15 trillion economy, why is so *little* spent on campaign expenditures -- with this amount not even increasing in terms of real income as the economy grows?

One thing I can see is that in Table I where the statistics for the businesses are presented, the mean and the median are both shown and are quite different. This would imply the "standard deviation" is not so standard and t-statistics taken relative to a normal distribution (standard error) would be nonsensical.

Congratulations for your blog, in respect o entry two of your list the paper from Cohen, Coval, and Malloy
When you say: " I can’t find anything wrong with their work." you mean that you don't find that is wrong to suppose:
"representative agent who maximizes the following utility function", so many wrong things in this phrase, furthermore the technical restrictions are ridiculous
"Cobb-Douglas" means that the result will follow the properties imposed, nothing surprising there.
The Econometrics used are parametric...when non-parametric tools could be much more precise and really show us what's really going on without imposing special conditions.

I'm not that familiar with the neo-classical model, so maybe someone can help me with this.

CCM's model says that " Increased resources from the government that are not expected to be funded by taxes or borrowing induce individuals to increase their consumption and leisure. The resulting decline in the marginal productivity of capital compels companies to scale back investment and output."

But isn't the result also consistent with government hiring increasing the prevailing wage, causing private employment to move along the demand curve? They present that as a possibility on p.20, but don't seem to be interested in identifying which mechanism is at work.

Also that the stimulus may prevent wages from falling, and thus hamper recovery from supply side shocks.

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