A Dynamic Panel Analysis of Campaign Contributions
in Elections for the U.S. House of Representatives
Charles P. Himmelbergy
Gregory J. Wawroyy
July 17, 1998
Paper prepared for presentation at the 1998 Political Methodology Summer Conference.
The authors would like to thank Dan Fisher for research assistance.
y Associate Professor of Finance and Economics, Columbia Business School, Columbia
yy Assistant Professor, Department of Political Science, Columbia University,
Political scientists have recognized the importance of dynamics in understanding the role
of campaign nance in congressional elections. Yet for the most part, researchers have not
exploited available data to its fullest or used appropriate methods to answer questions of
interest. Though the Federal Election Commission's reporting and disclosure requirements
enable us to use panel data models, researchers have ignored these powerful tools. One of
the main advantages of panel data methods is that they enable us to account for unobserved
individual and temporal eects that, if not accounted for, might lead us to incorrect infer-
ences. In this paper we describe the problems with estimating dynamic panel models and
discuss techniques that correct for these problems. We apply recently developed panel data
methods to estimate a dynamic model of campaign nance and assess the usefulness of these
methods by examining the robustness of results obtained with more traditional methods. We
examine the relationship between past and current campaign contributions to incumbents
and challengers during the 1986 through 1992 election cycles. Dynamic panel estimators give
results that dier in substantively interesting ways from those given by standard estimators.
In particular, the estimates obtained from dynamic panel methods suggest that challengers
who are successful fundraisers can cut into the fundraising eorts of incumbents.
Campaign nance continues to be an important topic of concern in p