Cameron A. Shelton

The Vicious Cycle: Fundraising and Perceived Viability in US Presidential Primaries

Scholars of presidential primaries have long posited a dynamic positive feedback loop between fundraising and electoral success. Yet existing work on both directions of this feedback remains inconclusive and is often explicitly cross-sectional, ignoring the dynamic aspect of the hypothesis. Pairing high-frequency FEC data on contributions and expenditures with Iowa Electronic Markets data on perceived probability of victory, we examine the bidirectional feedback between contributions and viability. We find robust, significant positive feedback in both directions. This might suggest multiple equilibria: a candidate initially anointed as the front-runner able to sustain such status solely by the fundraising advantage conferred despite possessing no advantage in quality. However, simulations suggest the feedback loop cannot, by itself, sustain advantage. Given the observed durability of front-runners, it would thus seem there is either some other feedback at work and/or the process by which the initial front-runner is identified is informative of candidate quality.

Policy Uncertainty and Manufacturing Investment: Evidence from U.S. State Elections

We estimate the effect of electorally induced policy uncertainty on investment in the manufacturing sector. Because state governors exercise considerable influence over legislation and considerable discretion over regulation and permitting, and because the policies relevant to business investment vary systematically by party, uncertainty over the partisan affiliation of the future governor is a source of political risk to firms considering business investment. More importantly, the lack of an incumbent in a race due to term limits raises uncertainty over the outcome, providing a convincing instrument that allows us to estimate causal effects. We find that, in a state with average partisan polarization, in the calendar year of a gubernatorial election, the elasticity of investment to the eventual margin of victory is 0.027. Both the significance and magnitude of this result are robust to various controls, measures, and estimators. Importantly, the investment decline is not reversed the following year. We show that own-state uncertainty is associated with a large and significant rise in neighboring states’ investment, suggesting that rather than postponing investment to the future, the effect of policy uncertainty at the subnational level is to drive investment to alternative sites.

Caught in a Poverty Trap? Testing for Single vs. Multiple Equilibrium Models of Growth

Abstract We look for permanent effects to per capita GDP from exogenous, temporary shocks. Our shocks are temporary changes to the export revenues of small, open economies. We find no evidence that even the largest of these temporary shocks, in excess of 9.7% of GDP, produce permanent effects to the growth path of per capita GDP. The inability to reject a single-equilibrium world with shocks of this magnitude suggests that multiple-equilibria, if they exist, are too widely separated to be policy-relevant. Current aid initiatives, which are of a similar magnitude, are not likely to deliver transition to a higher growth path.