While most voters and politicians are convinced that campaign finance shapes policy and elections, studies typically have found small or no effects. However, better data and a greater focus on causal identification have transformed the literature in recent years.

In this chapter, I take stock of our current understanding of campaign finance in democratic countries: Who are the campaign donors and what motivates them? How does campaign finance affect policy? And how does campaign spending affect elections?

I argue that the recent findings chip away at the old conventional wisdom that campaign spending has little impact, and instead supports the view that it has important consequences for policy and election outcomes. I also point to gaps in our understanding and highlight areas for future research.