Local Economic Growth from Primary Election Spending

Many studies estimate the degree to which government spending affects economic growth, developing strategies to overcome the endogeneity problem resulting from the allocation of money to areas with the greatest need. We use an exogenous form of spending -the money spent while campaigning for a party's Presidential primary nomination- to answer a similar question. This paper also highlights a potential economic incentive for states to hold early primaries, whereas past work only focuses on the disproportionate policy influence that states with early primaries gain. To answer these questions, we create a novel dataset combining the date each state held its primary from 1976-2008, the date in each election cycle in which only one candidate remained, and quarterly state income by sector. We find that hosting a primary election increases total income, particularly in the accommodations sector. We confirm these results using data on primary campaign expenditures across states in the 2004 and 2008 elections.