Working Paper: NBER ID: w10170
Authors: Torsten Persson
Abstract: The paper presents empirical findings regarding the economic policy consequences of constitutional arrangements, in three different dimensions. First, the data are consistent with several theoretical predictions about the consequences of electoral rules and forms of government for fiscal policy and rent extraction, even when non-random constitution selection is taken into account. Second, empirical tests of the predictions from a new comprehensive model of parliamentary democracy show that proportional elections raise government spending through their indirect consequences for party structures and types of government, rather than through their direct effects on policymaking incentives. Third, new empirical results suggest that constitutional arrangements may have important consequences for structural polices that promote long-run economic performance, hinting at a missing link in the causal chain from history to current economic performance. All these empirical findings appear statistically robust, and the estimated effects are large enough to be of genuine economic interest.
Keywords: No keywords provided
JEL Codes: D72; E60; H00; O11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| District Magnitudes and Personal Ballots (D79) | Rent Extraction (R21) |
| District Magnitudes and Personal Ballots (D79) | Corruption and Inefficiency (D73) |
| Constitutional Arrangements (K10) | Structural Policies (J08) |
| Constitutional Arrangements (K10) | Economic Outcomes (P47) |
| Electoral Rules (K16) | Government Spending (H59) |
| Electoral Rules (K16) | Fiscal Policy (E62) |
| Electoral Rules (K16) | Government Spending (H59) |
| Form of Government (H10) | Total Spending (H59) |
| Form of Government (H10) | Non-targeted Spending Programs (H53) |