Working Paper: CEPR ID: DP2872
Authors: Torsten Persson; Guido Tabellini
Abstract: We investigate the effect of electoral rules and political regimes on fiscal policy outcomes in a panel of 61 democracies from 1960 onwards. In presidential regimes, the size of government is smaller and less responsive to income shocks, compared to parliamentary regimes. Under majoritarian elections, social transfers are smaller and aggregate spending less responsive to income shocks than under proportional elections. Institutions also shape electoral cycles: only in presidential regimes is fiscal adjustment delayed until after the elections, and only in proportional and parliamentary systems do social transfers expand around elections. Several of these empirical regularities are in line with recent theoretical work; others are still awaiting a theoretical explanation.
Keywords: constitution; electoral rule; government spending; politics; presidentialism
JEL Codes: H00
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| presidential regimes (P16) | smaller governments (H10) |
| presidential regimes (P16) | less spending on broad programs (H53) |
| majoritarian electoral rules (D72) | smaller social transfers (H87) |
| majoritarian electoral rules (D72) | less responsive government spending to income shocks (E62) |
| presidential regimes (P16) | delayed fiscal adjustments (E62) |
| majoritarian elections (D72) | less spending on broad programs (H53) |
| majoritarian elections (D72) | smaller deficits (H62) |