Working Paper: CEPR ID: DP4226
Authors: Torsten Persson; Gérard Roland; Guido Tabellini
Abstract: We present a theoretical model of a parliamentary democracy, where party structures, government coalitions and fiscal policies are endogenously determined. The model predicts that, relative to proportional elections, majoritarian elections reduce government spending because they reduce party fragmentation and, therefore, the incidence of coalition governments. Party fragmentation can persist under majoritarian rule if party supporters are unevenly distributed across electoral districts. Economic and political data, from up to 50 post-war parliamentary democracies, strongly support our joint predictions from the electoral rule, to the party system, to the type of government, and to government spending.
Keywords: Coalition Governments; Electoral Accountability; Electoral Rules; Fiscal Policy; Party Systems
JEL Codes: D72; D78; H00
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Electoral rules (K16) | Party fragmentation (D72) |
| Party fragmentation (D72) | Coalition governments (D79) |
| Coalition governments (D79) | Government spending (H59) |
| Electoral rules (K16) | Coalition governments (D79) |
| Electoral rules (K16) | Government spending (H59) |
| Party fragmentation (D72) | Government spending (H59) |