Center for the Study of Democracy

Spain reformed the law regulating campaign expenditure in the first half of the nineties. Political parties represented in Parliament claimed that the aims of the reforms were equity and the control of public expenditure in a time of recession. However, the new regulations helped the parties to attain more ‘self-serving’ objectives (i.e., to solve their financial problems by shifting campaign costs to public budgets and improve their credibility, damaged badly by the fund raising scandals reported by the media). A principal outcome of the new campaign regulation was to establish an effective cap to electoral expenditure. This would have not been feasible in the seventies or eighties. Subsequently, the parties confronted a situation of parametric choice, trapped in a prisoner’s dilemma in which each party had to spend more in order to prevent the others from obtaining electoral advantage. But in the nineties, the two largest parties, ridden with problems of soaring electoral debts and disgruntled voters, used the political finance reforms of as a coordination device to attain a Pareto efficient position.