2. A researcher wants to estimate the effect of campaign spending on .pdf

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2. A researcher wants to estimate the effect of campaign spending on campaign votes. Assume that each election has two candidates. Let voteA be the percentage of the vote for Candidate A, let expendA be campaigning expenditures by Candidate A, let expendB be campaigning expenditures by Candidate B, and let totexpend be total campaign expenditures; the latter three variables are all measured in dollars. Suppose that the model is specified as voteA=0+1expendA+2expendB+3totexpend+u a) What is the problem with this model? b) How would you fix this problem? c) Now suppose that we use as explanatory variables expendA, expend, and shareA, where share A=100 (expendA/totexpend) is the percentage share of total campaign expenditures made by candidate A. Would this model suffer from the same problem as model above?.

2. A researcher wants to estimate the effect of campaign spending on campaign votes. Assume
that each election has two candidates. Let voteA be the percentage of the vote for Candidate A,
let expendA be campaigning expenditures by Candidate A, let expendB be campaigning
expenditures by Candidate B, and let totexpend be total campaign expenditures; the latter three
variables are all measured in dollars. Suppose that the model is specified as
voteA=0+1expendA+2expendB+3totexpend+u a) What is the problem with this model? b) How
would you fix this problem? c) Now suppose that we use as explanatory variables expendA,
expend, and shareA, where share A=100 (expendA/totexpend) is the percentage share of total
campaign expenditures made by candidate A. Would this model suffer from the same problem as
model above?

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